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X.X. XXXXXX, INC. AND THE GUARANTORS PARTY HERETO
9.75% SENIOR SUBORDINATED NOTES DUE 2010
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FIRST SUPPLEMENTAL INDENTURE
DATED AS OF SEPTEMBER 11, 2000
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AMERICAN STOCK TRANSFER & TRUST COMPANY,
TRUSTEE
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FIRST SUPPLEMENTAL INDENTURE dated as of September 11, 2000
("SUPPLEMENTAL INDENTURE"), to the Indenture dated as of September 11, 2000 (as
amended, modified or supplemented from time to time in accordance therewith, the
"INDENTURE"), by and among X.X. XXXXXX, INC., a Delaware corporation (the
"Company"), each of the Guarantors (as defined herein) and AMERICAN STOCK
TRANSFER & TRUST COMPANY, as trustee (the "TRUSTEE").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of 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
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 9.75% Senior Subordinated
Notes due 2010 in the aggregate principal amount of up to $200 million,
substantially in the form attached hereto as Exhibit A (the "NOTES"), guaranteed
by the Guarantors, on the terms 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 $200 million in one or more 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 "9.75% Senior Subordinated Notes due
2010." The Notes shall be in the form of EXHIBIT A hereto. The Notes shall be
guaranteed by the Guarantors as 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.
In the event that the Company shall issue and the Trustee
shall authenticate any Notes issued under this Supplemental Indenture subsequent
to the Issue Date (such Notes, "ADDITIONAL SECURITIES"), the Company shall use
its best efforts to obtain the same "CUSIP" number for such Notes as is printed
on the Notes outstanding at such time; PROVIDED, HOWEVER, that if any series of
Notes issued under this Supplemental Indenture subsequent to the Issue Date is
determined, pursuant to an Opinion of Counsel of the Company in a form
reasonably satisfactory to the Trustee, to be a different class of security than
the Notes outstanding at such time for federal income tax purposes, the Company
may obtain a "CUSIP" number for such Notes that is different than the "CUSIP"
number printed on the Notes then outstanding. Notwithstanding the foregoing, all
Notes issued under this Supplemental Indenture shall vote and consent together
on all matters as one class and no series of Notes will have the right to vote
or consent as a separate class on any matter.
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 herein will govern.
"ACQUIRED INDEBTEDNESS" means (i) with respect to any Person
that 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
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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.
"AFFILIATE" means, when used with reference to a specified
Person, any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Person specified.
"ASSET ACQUISITION" means (i) an Investment by the Company or
any Restricted Subsidiary in any other Person if, as a result of such
Investment, such Person shall become a Restricted Subsidiary or shall be
consolidated or merged with or into the Company 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 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
to any Person of any Property having a fair market value in any transaction or
series of related transactions of at least $10,000,000. The term "ASSET
DISPOSITION" shall not include (i) a transaction between the Company and any
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 (vi) dispositions of
mortgage loans and
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related assets and mortgage-backed securities in the ordinary course of a
mortgage lending business.
"ATTRIBUTABLE DEBT" means, with respect to any Capitalized
Lease Obligations, the capitalized amount thereof determined in accordance with
GAAP.
"BANKRUPTCY LAW" means title 11 of the United States Code, as
amended, or any similar federal or state law for the relief of debtors.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
or in such Person's capital stock or other equity interests, and options, rights
or warrants to purchase such capital stock or other equity interests, whether
now outstanding or issued after the Issue Date, including, without limitation,
all Disqualified Stock and Preferred Stock.
"CAPITALIZED LEASE OBLIGATIONS" of any Person means the
obligations of such Person to pay rent or other amounts under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of such obligations will be the capitalized amount thereof
determined in accordance with GAAP.
"CASH EQUIVALENTS" means: (a) U.S. dollars; (b) securities
issued or directly and fully guaranteed or insured by the U.S. government or any
agency or instrumentality thereof having maturities of one year or less from the
date of acquisition; (c) certificates of deposit and eurodollar time deposits
with maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500 million; (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(b) and (c) entered into with any financial institution meeting the
qualifications specified in clause (c) above; (e) commercial paper rated P-1,
A-1 or the equivalent thereof by Xxxxx'x 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 one transaction or a series of transactions) of all or
substantially all of the consolidated assets of the Company and its Restricted
Subsidiaries to any Person (other than a Restricted Subsidiary); PROVIDED,
HOWEVER, that a transaction where the Holders of all classes of Common Equity of
the Company immediately prior to such transaction own, directly or indirectly,
more than 50% of all classes of Common Equity of such Person immediately after
such transaction shall not be a Change of Control; (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
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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, that a liquidation or dissolution of the Company which is part of a
transaction that does not constitute a Change of Control under the proviso
contained in clause (i) above shall not constitute a Change of Control.
"COMMON EQUITY" of any Person means Capital Stock of such
Person that 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 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 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 determination date, the ratio of (x) Consolidated Cash Flow Available for
Fixed Charges for the prior four full fiscal quarters (the "FOUR QUARTER
PERIOD") for which financial results have been reported immediately preceding
the determination date (the "TRANSACTION DATE"), to (y) the aggregate
Consolidated Interest Incurred for the Four Quarter Period. For purposes of this
definition, "Consolidated Cash Flow Available for Fixed Charges" and
"Consolidated Interest Incurred" shall be calculated after giving effect on a
PRO FORMA basis for the period of such calculation to (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 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
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or after the first day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the
Four Quarter Period, except that Indebtedness under revolving credit
facilities shall be deemed to be the average daily balance of such
Indebtedness during the Four Quarter Period (as reduced on such PRO FORMA
basis by the application of any proceeds of the incurrence of Indebtedness
giving rise to the need to make such calculation); (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 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 determined on a fluctuating basis as of the Transaction Date
(including Indebtedness actually incurred on the Transaction Date) and which
will continue to be so determined thereafter shall be deemed to have accrued
at a fixed rate PER ANNUM equal to the rate of interest on such Indebtedness
in effect on the Transaction Date; and (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 operation of such agreements.
"CONSOLIDATED INTEREST EXPENSE" of the Company for any period
means 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 Incurred of the Company and the Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
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"CONSOLIDATED NET INCOME" for any period means the aggregate
net income (or loss) of the Company and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP; PROVIDED that
there will be excluded from such net income (loss) (to the extent otherwise
included therein), without duplication: (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 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 Net Income solely as it relates to clause (iii) of
Section 3.04(a) hereof, clause (iv)(b) above shall not be applicable.
"CONSOLIDATED NET WORTH" of any Person as of any date means
the stockholders' equity (including any Preferred Stock that is classified as
equity under GAAP, other than Disqualified Stock) of such Person and its
Restricted Subsidiaries on a consolidated basis at the end of the fiscal
quarter immediately preceding such date, as determined in accordance with
GAAP, less any amount attributable to Unrestricted Subsidiaries.
"CONSOLIDATED TANGIBLE ASSETS" of the Company as of any date
means the total amount of assets of the Company and its Restricted
Subsidiaries (less applicable reserves) on a consolidated basis at the end of
the fiscal quarter immediately preceding such date, as
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determined in accordance with GAAP, less (1) Intangible Assets and (2)
appropriate adjustments on account of minority interests of other Persons
holding equity investments in Restricted Subsidiaries.
"CONTINUING DIRECTOR" means a director who either was a
member of the Board of Directors of the Company on the date of the Indenture
or who became a director of the Company subsequent to such date and whose
election, or nomination for election by the Company's stockholders, was duly
approved by a majority of the Continuing Directors on the Board of Directors
of the Company at the time of such approval, either by a specific vote or by
approval of the proxy statement issued by the Company on behalf of the entire
Board of Directors of the Company in which such individual is named as nominee
for director.
"CONTROL", when used with respect to any Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "CONTROLLING" and "CONTROLLED" have meanings
correlative to the foregoing.
"CREDIT FACILITIES" means, collectively, each of the credit
facilities 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 be amended,
restated, supplemented or otherwise modified from time to time, and includes
any agreement extending the maturity of, increasing the amount of, or
restructuring, all or any portion of the Indebtedness under such facility or
line of credit or any successor facilities or lines of credit and includes any
facility or line of credit with one or more lenders refinancing or replacing
all or any portion of the Indebtedness under such facility or line of credit
or any successor facility or line of credit.
"CURRENCY AGREEMENT" of any Person means any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person or any of its Subsidiaries against
fluctuations in currency values.
"CUSTODIAN" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
"DEFAULT" means any event, act or condition that is, or
after notice or the passage of time or both would be, an Event of Default.
"DESIGNATION AMOUNT" has the meaning provided in the
definition of Unrestricted Subsidiary.
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"DISQUALIFIED STOCK" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, (i) matures or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the Holder thereof, in whole or in part, on
or prior to the final maturity date of the Notes or (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 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.
"FAIR MARKET VALUE" means, with respect to any asset, the
price (after taking into account any liabilities relating to such assets) that
would be negotiated in an arm's-length transaction for cash between a willing
seller and a willing and able buyer, neither of which is under any compulsion
to complete the transaction, as such price is determined in good faith by the
Board of Directors of the Company or a duly authorized committee thereof, as
evidenced by a resolution of such Board or committee.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect on the date of
this Supplemental Indenture.
"GUARANTORS" means (i) initially, each of:
DRHI, Inc., a Delaware corporation;
Xxxxxxx I, Ltd., a Delaware corporation;
Xxxxxxx II, Ltd., a Delaware corporation;
Xxxxxxx IX, Inc., a New Jersey corporation;
Xxxxxxx X, Inc., a New Jersey corporation;
X.X. Xxxxxx, Inc.-Minnesota, a Delaware corporation;
X.X. Xxxxxx, Inc. - Greensboro, a Delaware corporation;
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X.X. Xxxxxx, Inc. - Birmingham, an Alabama corporation;
X.X. Xxxxxx, Inc. - Chicago, a Delaware corporation;
X.X. Xxxxxx, Inc. - San Diego, a Delaware corporation;
X.X. Xxxxxx, Inc. - New Jersey, a Delaware corporation;
X.X. Xxxxxx, Inc. - Torrey, a Delaware corporation;
DRH Construction, Inc., a Delaware corporation;
X.X. Xxxxxx, Inc. - Louisville, a Delaware corporation;
X.X. Xxxxxx, Inc. - Denver, a Delaware corporation;
X.X. Xxxxxx San Diego Holding Company, Inc., a California corporation;
X.X. Xxxxxx Los Angeles Holding Company, Inc., a California corporation;
SGS Communities at Grande Quay, L.L.C., a New Jersey limited liability company;
X.X. Xxxxxx Management Company, Ltd., a Texas limited partnership;
X.X. Xxxxxx-Texas, Ltd., a Texas limited partnership;
X.X. Xxxxxx, Inc. - Sacramento, a California corporation;
DRH Cambridge Homes, Inc., a California corporation;
C. Xxxxxxx Xxxxxx Builders, Inc., a Virginia corporation;
DRH Tucson Construction, Inc., a Delaware corporation;
Continental Homes, Inc., a Delaware corporation;
KDB Homes, Inc., a Delaware corporation;
Continental Residential, Inc., a Delaware corporation;
Continental Homes of Florida, Inc., a Florida corporation;
CHI Construction Company, an Arizona corporation;
CHTEX of Texas, Inc., a Delaware corporation;
CH Investments of Texas, Inc., a Delaware corporation;
Continental Homes of Texas, L.P., a Texas limited partnership;
X.X. Xxxxxx, Inc. - Portland, a Delaware corporation;
and (ii) each of the Company's Subsidiaries which becomes a guarantor of the
Notes pursuant to the provisions of the Indenture.
"HOLDER" means the Person in whose name a Note is registered
in the books of the Registrar for the Notes.
"INDEBTEDNESS" of any Person means, without duplication, (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 instruments 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,
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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.
"INTANGIBLE ASSETS" of the Company means all unamortized
debt discount and expense, unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, copyrights, write-ups of assets over
their prior carrying value (other than write-ups which occurred prior to the
Issue Date and other than, in connection with the acquisition of an asset, the
write-up of the value of such asset (within one year of its acquisition) to
its fair market value in accordance with GAAP) and all other items which would
be treated as 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 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
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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 Xxxxx'x 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.
"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.
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"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) indemnities 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.
"PERMITTED INDEBTEDNESS" means (i) Indebtedness under Credit
Facilities which does not exceed $1.0 billion aggregate 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
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Restricted Subsidiary; PROVIDED, HOWEVER, that any Indebtedness of any
Restricted Subsidiary or the Company owed to any Restricted Subsidiary that
ceases to be a Restricted Subsidiary shall be deemed to be incurred and shall
be treated as an incurrence for purposes of Section 3.02(a) 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 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 $1,000,000 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 servicing or other mortgage related
assets; and (ix) Investments in an aggregate amount outstanding not to exceed
$100 million.
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"PERMITTED LIENS" means: (1) 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, (2) 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, (3) Liens (other
than any Lien imposed by the Employer Retirement Income Security Act of 1974, as
amended) incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, (4) 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, (5) attachment or judgment Liens not giving rise to a
Default or an Event of Default, (6) easements, dedications, assessment district
or similar liens in connection with municipal or special district financing,
rights-of-way, restrictions, reservations and other similar charges, burdens,
and other similar charges or encumbrances not materially interfering with the
ordinary course of business of the Company and the Restricted Subsidiaries, (7)
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, (8) Liens securing Indebtedness incurred pursuant to
clause (8) or (9) of the definition of Permitted Indebtedness, (9) 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 (9) 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), (10) 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, (11) 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
-16-
Indebtedness, (12) 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, (13)
leases or subleases granted to others not materially interfering with the
ordinary course of business of the Company and the Restricted Subsidiaries,
(14) 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, (15) 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,
(16) 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, (17) 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, (18) Liens for homeowner and property owner
association developments and assessments, (19) Liens securing Refinancing
Indebtedness; PROVIDED, that such Liens extend only to the assets securing
the Indebtedness being refinanced, (20) 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, and (21) Liens securing Senior Indebtedness and Liens securing
Guarantor Senior Indebtedness.
"PERSON" means any individual, corporation, partnership,
limited liability company, joint venture, incorporated or unincorporated
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PREFERRED STOCK" of any Person means all Capital Stock of
such Person which has a preference in liquidation or with respect to the payment
of dividends.
"PROPERTY" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person, whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.
"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
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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 (i) S&P and (ii) 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 the 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 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.
"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).
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"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.
"TRUSTEE" means the party named as such above until a
successor replaces such party in accordance with the applicable provisions of
the Indenture and thereafter means the successor serving hereunder.
"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 3.04 hereof, to the extent provided therein, (ii) the Company must be
permitted under Section 3.04 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 or be
continuing. In accordance with the foregoing, and not in limitation
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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
Subsidiaries; PROVIDED, HOWEVER, that the ownership of the general
partnership interest (or a similar member's interest in a limited liability
company) by an Unrestricted Subsidiary shall not cause a Subsidiary of the
Company of which more than 95% of the equity interest is held by the Company
or one or more Restricted Subsidiaries to be deemed an Unrestricted
Subsidiary.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness or portion thereof at any date, the number of years obtained by
dividing (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.
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(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.
Section 3.02. LIMITATIONS ON INDEBTEDNESS.
(a) Until the Notes are rated Investment Grade by both Rating
Agencies (after which time this Section 3.02 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, this Section 3.02 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 Section
3.02, 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.
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Section 3.03. LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS.
The Company will not, and will not cause or permit any
Guarantor to, directly or indirectly, incur any Indebtedness that purports by
its terms (or by the terms of any agreement governing such Indebtedness) to rank
senior in right of payment to the Notes and subordinated in right of payment to
any other Indebtedness of the Company or of such Guarantor, as the case may be.
Section 3.04. LIMITATION ON RESTRICTED PAYMENTS.
Until the Notes are rated Investment Grade by both Rating
Agencies (after which time this Section 3.04 will no longer be in effect)
(a) the Company will not, and will not cause or permit any
Restricted Subsidiary to, directly or indirectly, make any Restricted Payment
unless:
(i) no Default or Event of Default shall have occurred and
be continuing at the time of or immediately after giving effect to such
Restricted Payment;
(ii) immediately after giving effect to such Restricted
Payment, the Company could incur at least $1.00 of Indebtedness
pursuant to Section 3.02(a); 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 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
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(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 than Restricted
Payments referred to in clause (C) of (b) below) made after June 9,
1997 through the Issue Date.
(b) Clauses (ii) and (iii) of (a) above 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 (a) above.
(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 (a) above, 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
-23-
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 does 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.
Section 3.05. LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.
Until the Notes are rated Investment Grade by both Rating
Agencies (after which time this Section 3.05 will no longer be in effect),
(a) 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
-24-
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 (a) and (b) above , 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 3.04, (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 Indenture)) 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 3.06. LIMITATIONS ON DISPOSITIONS OF ASSETS.
Until the Notes are rated Investment Grade by both Rating
Agencies (after which time this Section 3.06 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 repay, purchase or
redeem Senior Indebtedness and/or Guarantor Senior Indebtedness or (c) to the
extent not used pursuant to clauses (a) and (b), be applied to make a Net Cash
Proceeds Offer for the Notes
-25-
and, if the Company or a Restricted Subsidiary elects or is required to do
so, repay, purchase or redeem any other Indebtedness that ranks PARI PASSU
with the Notes (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
PARI PASSU 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) or (c) of the preceding sentence except
to the extent that such Net Cash Proceeds, together with the aggregate Net
Cash Proceeds of prior Asset Dispositions (other than those so used) which
have not been applied in accordance with this provision and as to which no
prior 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 Section 3.06 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 converted into cash, does not exceed 5% of Consolidated Tangible Assets;
PROVIDED, HOWEVER, that when any non-cash consideration is converted into
cash, such cash shall constitute Net Cash Proceeds and be subject to the
preceding sentence.
Section 3.07. 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 the Indenture and the Notes
and/or the Guarantees, as the case may be, are secured (i) in the case of an
obligation that ranks pari passu with the Notes or a Guarantee, on at least an
equal and ratable basis with the obligation so secured and (ii) in the case of
an obligation that is subordinated to the Notes or a Guarantee, on a basis that
is senior in priority to the Lien securing such obligation, in each case, until
such time as such obligation is no longer secured by a Lien.
Section 3.08. 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
-26-
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 Supplemental 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
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 3.09. 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)
-27-
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). 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.
Section 3.10. 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 without
giving effect to principles of conflicts of laws.
-28-
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 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.
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:
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board
S-2
GUARANTORS:
DRHI, Inc.
Xxxxxxx I, Ltd.
Xxxxxxx IX, Inc.
Xxxxxxx X, Inc.
X.X. Xxxxxx, Inc. - Birmingham
X.X. Xxxxxx, Inc. - Chicago
X.X. Xxxxxx, Inc. - Denver
X.X. Xxxxxx, Inc. - Greensboro
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. - San Diego
X.X. Xxxxxx, Inc. - Torrey
X.X. Xxxxxx San Diego Holding Company, Inc.
X.X. Xxxxxx Los Angeles Holding Company, Inc.
DRH Construction, Inc.
DRH Cambridge Homes, Inc.
C. Xxxxxxx Xxxxxx Builders, Inc.
DRH Tucson Construction, Inc.
Continental Homes, Inc.
KDB Homes, Inc.
Continental Residential, Inc.
Continental Homes of Florida, Inc.
CHI Construction Company
CHTEX of Texas, Inc.
By:
----------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
S-3
XXXXXXX II, LTD.
CH INVESTMENTS OF TEXAS, INC.
By:
------------------------------------------
Name: Xxxxxxx Xxxx
Title: President
S-4
SGS COMMUNITIES AT GRANDE QUAY, LLC
By: Xxxxxxx IX, Inc., a member
By:
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
and
By: Xxxxxxx X, Inc., a member
By:
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
X.X. XXXXXX MANAGEMENT COMPANY, LTD.
X.X. XXXXXX-TEXAS, LTD.
By: Xxxxxxx I, Ltd.,
its general partner
By:
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
S-5
CONTINENTAL HOMES OF TEXAS, L.P.
By: CHTEX of Texas, Inc.
its general partner
By:
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
S-6
AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Trustee
By:
----------------------------
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
NO. CUSIP NO.: 00000XXX0
9.75% SENIOR SUBORDINATED NOTES DUE 2010
X.X. XXXXXX, INC.
A DELAWARE CORPORATION
promises to pay to CEDE & CO.
or registered assigns
the principal sum of on September 15, 2010
Interest Payment Dates: March 15 and September 15, commencing March 15, 2001
Interest Record Dates: March 1 and September 1
Dated:
X.X. XXXXXX, INC.
[Seal]
By:
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board
By:
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
A-2
American Stock Transfer & Trust Company, as
Trustee, certifies that this is one of the
Securities referred to in the within mentioned
Indenture.
Date:
By:
-----------------------------------------
Authorized Signatory
A-3
X.X. XXXXXX, INC.
9.75% SENIOR SUBORDINATED NOTES DUE 2010
1. INTEREST.
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 March 15
and September 15 of each year, commencing March 15, 2001, 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.
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 March 1 and September 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.
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 may act as Paying Agent, Registrar or
co-Registrar.
4. INDENTURE.
The Company issued the Securities under an Indenture dated
as of September 11, 2000 among the Company, the Guarantors and the Trustee, as
supplemented by a First Supplemental Indenture dated as of September 11, 2000
(as so 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
A-4
1939 ("TIA") as in effect on the date of the Indenture. The Securities and the
Guarantees are subject to all such terms, and Securityholders 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.
The Company will furnish to any Securityholder 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.
Except as set forth in the following sentence, the
Securities will not be redeemable. At any time prior to September 15, 2003,
the Company may redeem these Securities with the net cash proceeds of one or
more Public Equity Offerings by the Company, at a redemption price equal to
109.75% of the principal amount of such Securities, plus accrued and unpaid
interest, if any, to the date of redemption; PROVIDED, HOWEVER, that at least
two-thirds of the aggregate principal amount of Securities issued under the
Indenture (excluding any Securities held by the Company or any of its
Affiliates) remains outstanding. 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.
The Securities are in registered form only without coupons
in denominations of $1,000 and integral multiples thereof. 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
A-5
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.
The registered Holder of this Security shall be treated as
the owner of it for all purposes.
8. UNCLAIMED MONEY.
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.
Subject to certain exceptions, the Indenture, the Securities
or the Guarantees may be amended or supplemented with the consent (which may
include consents obtained in connection with a tender offer or exchange offer
for Securities) of the Holders of at least a majority in principal amount of
the outstanding Securities then outstanding and any existing default under, or
compliance with any provision of the Indenture relating to the Securities may
be waived (other than any continuing Default or Event of Default in the
payment of interest on or the principal of the Securities) with the consent
(which may include consents obtained in connection with a tender offer or
exchange offer for Securities) of the Holders of a majority in principal
amount of the Securities then outstanding. Without the consent of any
Securityholder, the Company and the Trustee may amend or supplement the
Indenture, the Securities or the Guarantees 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
Securityholder.
10. SUCCESSOR CORPORATION.
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.
A-6
11. TRUSTEE DEALINGS WITH COMPANY.
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.
A director, officer, employee or stockholder, as such, of
the Company shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Securityholder by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
13. DISCHARGE OF INDENTURE.
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.
This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
15. ABBREVIATIONS.
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
A-7
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)
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:
----------------- -----------------------------
(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 guarantee program
reasonably acceptable to the Trustee).
[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.
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.
DRHI, Inc.
Xxxxxxx I, Ltd.
Xxxxxxx IX, Inc.
Xxxxxxx X, Inc.
X.X. Xxxxxx, Inc. - Birmingham
X.X. Xxxxxx, Inc. - Chicago
X.X. Xxxxxx, Inc. - Denver
X.X. Xxxxxx, Inc. - Greensboro
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. - San Diego
X.X. Xxxxxx, Inc. - Torrey
X.X. Xxxxxx San Diego Holding Company, Inc.
X.X. Xxxxxx Los Angeles Holding Company, Inc.
DRH Construction, Inc.
DRH Cambridge Homes, Inc.
C. Xxxxxxx Xxxxxx Builders, Inc.
DRH Tucson Construction, Inc.
Continental Homes, Inc.
KDB Homes, Inc.
Continental Residential, Inc.
Continental Homes of Florida, Inc.
CHI Construction Company
CHTEX of Texas, Inc.
By:
-----------------------------------------
Title:
SGS COMMUNITIES AT GRANDE QUAY, LLC
By: Xxxxxxx IX, Inc., a member
By:
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
and
By: Xxxxxxx X, Inc., a member
By:
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Treasurer
X.X. XXXXXX MANAGEMENT COMPANY, LTD.
X.X. XXXXXX-TEXAS, LTD.
By: Xxxxxxx I, Ltd., its general partner
By:
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Name: Xxxxxx X. Xxxxxx
Title: Treasurer
CONTINENTAL HOMES OF TEXAS, L.P.
By: CHTEX of Texas, Inc.
its general partner
By:
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Name: Xxxxxx X. Xxxxxx
Title: Treasurer
XXXXXXX II, LTD.
CH INVESTMENTS OF TEXAS, INC.
By:
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Name: Xxxxxxx Xxxx
Title: President
