EXHIBIT 4.1
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X.X. XXXXXX, INC. AND THE GUARANTORS PARTY HERETO
8 3/8% Senior Notes due 2004
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First Supplemental Indenture
Dated as of June 9, 1997
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AMERICAN STOCK TRANSFER & TRUST COMPANY,
Trustee
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FIRST SUPPLEMENTAL INDENTURE dated as of June 9, 1997 ("Supplemental
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Indenture"), to the Indenture dated as of June 9, 1997 (as amended, modified or
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supplemented from time to time in accordance therewith, the "Indenture"), by and
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among X.X. XXXXXX, INC., a Delaware corporation (the "Company"), each of the
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Guarantors (as defined herein) and AMERICAN STOCK TRANSFER & TRUST COMPANY, as
trustee (the "Trustee").
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Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the holders of Notes (as defined herein):
WHEREAS, the Company, the Guarantors and the Trustee have duly
authorized the execution and delivery of the Indenture to provide for the
issuance from time to time of one or more securities of senior debt securities
(the "Securities") to be issued in one or more series as in the Indenture
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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 8 3/8% Senior Notes due 2004 in the
aggregate principal amount of up to $250,000,000, substantially in the form
attached hereto as Exhibit A (the "Notes"), guaranteed by the Guarantors, on the
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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 holder thereof the Company and the Guarantors mutually covenant and
agree with the Trustee, for the equal and ratable benefit of the holders, that
the In-
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denture is supplemented and amended, to the extent expressed herein, as follows:
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
$250,000,000 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 "8 3/8% Senior Notes due 2004." The Notes shall be in the form of
Exhibit A hereto. If required, the Notes may bear an appropriate legend
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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
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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
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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
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defined herein have the meanings ascribed to such terms in the Indenture.
"Acquired Indebtedness" means (i) with respect to any Person that
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becomes a Restricted Subsidiary (or is merged into the Company or any Restricted
Subsidiary) after the Issue Date, Indebtedness of such Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary
(or is merged into the Company or any Restricted Subsidiary) that was not
incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary (or being merged into the Company or any Restricted
Subsidiary) and (ii) with respect to the Company or any Restricted Subsidiary,
any Indebtedness expressly assumed by the Company or any Restricted Subsidiary
in connection with the acquisition of any assets from another Person (other than
the Company or any Restricted Subsidiary), which Indebtedness was not incurred
by such other Person in connection with or in contemplation of such acquisition.
Indebtedness incurred in connection with or in contemplation of any transaction
described in clause (i) or (ii) of the preceding sentence shall be deemed to
have been incurred by the Company or a Restricted Subsidiary, as the case may
be, at the time such Person becomes a Restricted Subsidiary (or is merged into
the Company or any Restricted Subsidiary) in the case of clause (i) or at the
time of the acquisition of such assets in the case of clause (ii), but shall not
be deemed Acquired Indebtedness.
"Affiliate" means, when used with reference to a specified Person, any
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Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Person specified.
"Asset Acquisition" means (i) an Investment by the Company or any
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Restricted Subsidiary in any other Person if, as a result of such Investment,
such Person shall become a Restricted Subsidiary or shall be consolidated or
merged with or into the Company or any Restricted Subsidiary or (ii) the
acquisition by the Company or any Restricted Subsidiary of the assets of any
Person, which constitute all or substantially all of the assets or of an
operating unit or line of business of such Person or which is otherwise outside
the ordinary course of business.
"Asset Disposition" means any sale, transfer, conveyance, lease or
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other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback or sale of shares of Capital Stock in any
Subsidiary) (each, a "transaction") by the Company or any Restricted Subsidiary
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to
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any Person of any Property having a fair market value in any transaction or
series of related transactions of at least $1,000,000. The term "Asset
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Disposition" shall not include (i) a transaction between the Company and any
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Restricted Subsidiary or a transaction between Restricted Subsidiaries, (ii) a
transaction in the ordinary course of business, including, without limitation,
sales (directly or indirectly), dedications and other donations to governmental
authorities, leases and sales and leasebacks of (A) homes, improved land and
unimproved land and (B) real estate (including related amenities and
improvements), (iii) a transaction involving the sale of Capital Stock of, or
the disposition of assets in, an Unrestricted Subsidiary, (iv) any exchange or
swap of assets of the Company or any Restricted Subsidiary for assets that (x)
are to be used by the Company or any Restricted Subsidiary in the ordinary
course of its Real Estate Business and (y) have a Fair Market Value not less
than the Fair Market Value of the assets exchanged or swapped or (v) any sale,
transfer, conveyance, lease or other disposition of assets and properties of the
Company that is governed by Sections 3.09 hereof.
"Attributable Debt" means, with respect to any Capitalized Lease
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Obligations, the capitalized amount thereof determined in accordance with GAAP.
"Bankruptcy Law" means title 11 of the United States Code, as amended,
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or any similar federal or state law for the relief of debtors.
"Capital Stock" means, with respect to any Person, any and all shares,
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interests, participations or other equivalents (however designated) of or in
such Person's capital stock or other equity interests, and options, rights or
warrants to purchase such capital stock or other equity interests, whether now
outstanding or issued after the Issue Date, including, without limitation, all
Disqualified Stock and Preferred Stock.
"Capitalized Lease Obligations" of any Person means the obligations of
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such Person to pay rent or other amounts under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such obligations will be the capitalized amount thereof determined in
accordance with GAAP.
"Cash Equivalents" means: (a) U.S. dollars; (b) securities issued or
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directly and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof having maturities of one year or less from the date of
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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
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transaction or a series of transactions) of all or substantially all of the
consolidated assets of the Company and its Restricted Subsidiaries to any Person
(other than a Restricted Subsidiary); provided, however, that a transaction
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where the holders of all classes of Common Equity of the Company immediately
prior to such transaction own, directly or indirectly, more than 50% of all
classes of Common Equity of such Person immediately after such transaction shall
not be a Change of Control; (ii) a "person" or "group" (within the meaning of
Section 13(d) of the Exchange Act (other than (x) the Company or (y) Xxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxxx, or their respective wives, children, grandchildren
and other descendants, or any trust or other entity formed or controlled by any
of such individuals)) becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of Common Equity of the Company representing more than
50% of the voting power of the Common Equity of the Company; (iii) Continuing
Directors cease to constitute at least a majority of the Board of Directors of
the Company; or (iv) the stockholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company; provided, however,
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that a liquidation or dissolution of the Company which is part of a transaction
that does not constitute a Change of Control under the proviso contained in
clause (i) above shall not constitute a Change of Control.
"Common Equity" of any Person means Capital Stock of such Person that
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is generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection
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of the governing body, partners, managers or others that will control the
management or policies of such Person.
"Consolidated Adjusted Tangible Assets" of the Company as of any date
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means the Consolidated Tangible Assets of the Company and the Restricted
Subsidiaries at the end of the fiscal quarter immediately preceding the date
less any assets securing any Non-Recourse Indebtedness, as determined in
accordance with GAAP.
"Consolidated Cash Flow Available for Fixed Charges" means, for any
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period, on a consolidated basis for the Company and the Restricted Subsidiaries,
Consolidated Net Income for such period plus (each to the extent deducted in
calculating such Consolidated Net Income and determined in accordance with GAAP)
(a) the sum for such period, without duplication, of (i) income taxes, (ii)
Consolidated Interest Expense, (iii) depreciation and amortization expenses and
other non-cash charges to earnings and (iv) interest and financing fees and
expenses which were previously capitalized and which are amortized to cost of
sales, minus (b) all other non-cash items (other than the receipt of notes
receivable) increasing such Consolidated Net Income.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
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determination date, the ratio of (x) Consolidated Cash Flow Available for Fixed
Charges for the prior four full fiscal quarters (the "Four Quarter Period") for
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which financial results have been reported immediately preceding the
determination date (the "Transaction Date"), to (y) the aggregate Consolidated
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Interest Incurred for the Four Quarter Period. For purposes of this definition,
"Consolidated Cash Flow Available for Fixed Charges" and "Consolidated Interest
Incurred" shall be calculated after giving effect on a pro forma basis for the
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period of such calculation to (i) the incurrence or the repayment, repurchase,
defeasance or other discharge or the assumption by another Person that is not an
Affiliate (collectively, "repayment") of any Indebtedness of the Company or any
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Restricted Subsidiary (and the application of the proceeds thereof) giving rise
to the need to make such calculation, and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), at any time on or
after the first day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the Four
Quarter Period, except that Indebtedness under revolving credit facilities shall
be deemed to be the average daily balance of such Indebt-
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edness 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
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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
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Transaction Date; and (2) notwithstanding clause (1) above, interest on such
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Protection Agreements, shall be
deemed to accrue at the rate per annum resulting after giving effect to the
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operation of such agreements.
"Consolidated Interest Expense" of the Company for any period means the
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Interest Expense of the Company and the Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
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"Consolidated Interest Incurred" for any period means the Interest
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Incurred of the Company and the Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" for any period means the aggregate net income
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(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
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from such net income (loss) (to the extent otherwise included therein), without
duplication: (i) the net income (or loss) of (x) any Unrestricted 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, and (v) any
extraordinary gain or loss together with any related provision for taxes,
realized by the Company or any Restricted Subsidiary; provided, further, that
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for purposes of calculating Consolidated Net Income solely as it relates to
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clause (iii) of Section 3.03(a) hereof, clause (iv)(b) above shall not be
applicable.
"Consolidated Net Worth" of any Person as of any date means the
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stockholders' equity (including any Preferred Stock that is classified as equity
under GAAP, other than Disqualified Stock) of such Person and its Restricted
Subsidiaries on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less any
amount attributable to Unrestricted Subsidiaries.
"Consolidated Tangible Assets" of the Company as of any date means the
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total amount of assets of the Company and its Restricted Subsidiaries (less
applicable reserves) on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less:
(i) Intangible Assets and (ii) appropriate adjustments on account of minority
interests of other Persons holding equity investments in Restricted
Subsidiaries.
"Continuing Director" means a director who either was a member of the
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Board of Directors of the Company on the date of this Indenture or who became a
director of the Company subsequent to such date and whose election, or
nomination for election by the Company's stockholders, was duly approved by a
majority of the Continuing Directors on the Board of Directors of the Company at
the time of such approval, either by a specific vote or by approval of the proxy
statement issued by the Company on behalf of the entire Board of Directors of
the Company in which such individual is named as nominee for director.
"control", when used with respect to any Person, means the power to
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direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
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foregoing.
"Credit Facilities" means, collectively, each of the credit facilities
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and guidance lines of credit of the Company or one or more Restricted
Subsidiaries in existence on the date of this Supplemental Indenture and one or
more other facilities or guidance lines of credit among or between the Company
or one or more Restricted Subsidiaries and one or more lenders pursuant to which
the Company or any Restricted Subsidiary may incur Indebtedness for working
capital and general corporate purposes (including acquisitions), as any such
facility or line of credit may amended, restated, supplemented or otherwise
modi-
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fied 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,
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currency swap agreement or other similar agreement or arrangement designed to
protect such Person or any of its Subsidiaries against fluctuations in currency
values.
"Custodian" means any receiver, trustee, assignee, liquidator or
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similar official under any Bankruptcy Law.
"Default" means any event, act or condition that is, or after notice or
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the passage of time or both would be, an Event of Default.
"Designation Amount" has the meaning provided in the definition of
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Unrestricted Subsidiary.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
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the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (i) matures or is mandatorily
redeemable, pursuant to a sinking fund 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,
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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
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such provisions prior to the Company's repurchase of the Notes as are required
pursuant to Section 3.01 hereof.
"Dollars" and "$" mean United States Dollars.
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"Fair Market Value" means, with respect to any asset, the price (after
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taking into account any liabilities relating to such assets) that would be
negotiated in an arm's-length transaction for cash between a willing seller and
a willing and able buyer, neither of which is under any compulsion to complete
the transaction, as such price is determined in good faith by the Board of
Directors of the Company or a duly authorized committee thereof, as evidenced by
a resolution of such Board or committee.
"GAAP" means generally accepted accounting principles set forth in the
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opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, as in effect on the date of this Supplemental
Indenture.
"Guarantors" means (i) initially, each of: X.X. Xxxxxx Management
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Company, Ltd., a Texas limited partnership; DRHI, Inc., a Delaware corporation;
X.X. Xxxxxx-Royalty, Ltd., a Texas limited partnership; DRH Construction, Inc.,
a Delaware corporation; DRH New Mexico Construction, Inc., a Delaware
corporation; X.X. Xxxxxx Denver Management Company, Inc., a Colorado
corporation; X.X. Xxxxxx Denver No. 10, Inc., a Colorado corporation; X.X.
Xxxxxx Denver No. 11, Inc., a Colorado corporation; X.X. Xxxxxx Denver No. 12,
Inc., a Colorado corporation; X.X. Xxxxxx Denver No. 13, Inc., a Colorado
corporation; X.X. Xxxxxx Denver No. 14, Inc., a Colorado corporation; X.X.
Xxxxxx Denver No. 15, Inc., a Colorado corporation; X.X. Xxxxxx Denver No. 16,
Inc., a Colorado corporation; X.X. Xxxxxx Denver No. 17, Inc., a Colorado
corporation; X.X. Xxxxxx Denver No. 18, Inc., a Colorado corporation; X.X.
Xxxxxx, Inc.-Albuquerque, a Delaware corporation; X.X. Xxxxxx, Inc.- Denver, a
Delaware corporation; X.X. Xxxxxx, Inc.-Minnesota, a Delaware corporation; X.X.
Xxxxxx, Inc.-New Jersey, a New Jersey corporation; Xxxxxxx I, Ltd., a Delaware
corporation; Xxxxxxx II, Ltd., a Delaware corporation; Xxxxxxx III, Ltd., a
Delaware corporation; Xxxxxxx IX, Inc., a New Jersey corporation; Xxxxxxx X,
Inc., a New Jersey corporation; SGS Communities at Grande Quay, L.L.C., a New
Jersey limited liability company; X.X. Xxxxxx Los Angeles Holding Company, Inc.,
a California
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corporation; X.X. Xxxxxx Los Angeles Management Company, Inc., a California
corporation; X.X. Xxxxxx Los Angeles No. 9, Inc., a California corporation; X.X.
Xxxxxx Los Angeles No. 10, Inc., a California corporation; X.X. Xxxxxx Los
Angeles No. 11, Inc., a California corporation; X.X. Xxxxxx Los Angeles No. 12,
Inc., a California corporation; X.X. Xxxxxx Los Angeles No. 13, Inc., a
California corporation; X.X. Xxxxxx Los Angeles No. 14, Inc., a California
corporation; X.X. Xxxxxx Los Angeles No. 16, Inc., a California corporation;
X.X. Xxxxxx Los Angeles No. 17, Inc., a California corporation; X.X. Xxxxxx,
Inc. - Birmingham, a Delaware corporation; X.X. Xxxxxx, Inc. -Greensboro, a
Delaware corporation; X.X. Xxxxxx San Diego Holding Company, Inc., a California
corporation; X.X. Xxxxxx San Diego Management Company, Inc., a California
corporation; X.X. Xxxxxx San Diego No. 9, Inc., a California corporation; X.X.
Xxxxxx San Diego No. 10, Inc., a California corporation; X.X. Xxxxxx San Diego
No. 11, Inc., a California corporation; X.X. Xxxxxx San Diego No. 12, Inc., a
California corporation; X.X. Xxxxxx San Diego No. 13, Inc., a California
corporation; X.X. Xxxxxx San Diego No. 14, Inc., a California corporation; X.X.
Xxxxxx San Diego No. 15, Inc., a California corporation; X.X. Xxxxxx San Diego
No. 16, Inc., a California corporation; X.X. Xxxxxx San Diego No. 17, Inc., a
California corporation; X.X. Xxxxxx San Diego No. 18, Inc., a California
corporation; X.X. Xxxxxx San Diego No. 19, Inc., a California corporation; X.X.
Xxxxxx San Diego No. 20, Inc., a California corporation; X.X. Xxxxxx San Diego
No. 21, Inc., a California corporation; X.X. Xxxxxx-Texas, Ltd., a Texas limited
partnership; X.X. Xxxxxx, Inc. - Torrey, a Delaware corporation; and X. X.
Xxxxxx Atlanta, Ltd., a Georgia corporation; and (ii) each of the Company's
Subsidiaries which becomes a guarantor of the Notes pursuant to the provisions
of the Indenture.
"Indebtedness" of any Person means, without duplication, (i) any
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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 issued for the benefit of or surety, performance,
completion or payment xxxxx, xxxxxxx money notes or similar purpose undertakings
or indemnifications issued by, such Person in the ordinary course of business),
(b) evidenced by a bond, note, debenture or similar instrument (including a
purchase money obligation) given in connection with the acquisition of any
businesses, properties or assets of any kind or with services incurred in
connection with capital expenditures (other than any obligation to pay a
contingent purchase price which, as of the date of incurrence thereof is not
required to be recorded as a liability in accordance with GAAP), or (c) in
re-
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spect 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
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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, writeups of assets over their prior
carrying value (other than write-ups which occurred prior to the Issue Date and
other than, in connection with the acquisition of an asset, the write-up of the
value of such asset (within one year of its acquisition) to its fair market
value in accordance with GAAP) and all other items which would be treated as
intangibles on the consolidated balance sheet of the Company and the Restricted
Subsidiaries prepared in accordance with GAAP.
"Interest Expense" of any Person for any period means, without
----------------
duplication, the aggregate amount of (i) interest which, in conformity with
GAAP, would be set opposite the caption "interest expense" or any like caption
on an income statement for such Person (including, without limitation, imputed
interest included in Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, the net costs (but reduced by net gains) associated with
Currency Agreements and Interest Protection Agreements, amortiza-
-14-
tion of other financing fees and expenses, the interest portion of any deferred
payment obligation, amortization of discount or premium, if any, and all other
noncash interest expense other than interest and other charges amortized to cost
of sales), and (ii) all interest actually paid by the Company or a Restricted
Subsidiary under any guarantee of Indebtedness (including, without limitation, a
guarantee of principal, interest or any combination thereof) of any Person other
than the Company or any Restricted Subsidiary during such period; provided, that
--------
Interest Expense shall exclude any expense associated with the complete write-
off of financing fees and expenses in connection with the repayment of any
Indebtedness.
"Interest Incurred" of any Person for any period means, without
-----------------
duplication, the aggregate amount of (i) Interest Expense and (ii) all
capitalized interest and amortized debt issuance costs.
"Interest Protection Agreement" of any Person means any interest rate
-----------------------------
swap agreement, interest rate collar agreement, option or futures contract or
other similar agreement or arrangement designed to protect such Person or any of
its Subsidiaries against fluctuations in interest rates with respect to Debt
permitted to be incurred under this Supplemental Indenture.
"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 agree-
-15-
ment, 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.
"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
-16-
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 $300 million principal amount outstanding at
any one time; (ii) Indebtedness in respect of obligations of the Company to the
Trustee under the Indenture; (iii) intercompany debt obligations of the Company
to any Restricted Subsidiary and of any Restricted Subsidiary to the Company or
any other Restricted Subsidiary; provided, however, that any Indebtedness of any
Restricted Subsidiary or the Company owed to any Restricted Subsidiary or to the
Company that ceases to be a Restricted Subsidiary shall be deemed to be incurred
and shall be treated as an incurrence for purposes of the first paragraph of the
covenant described under "Limitations on Indebtedness" at the time the
Restricted Subsidiary in question ceases to be a Restricted Subsidiary; (iv)
Indebtedness of the Company or any Restricted Subsidiary under any Currency
Agreements or Interest Protection Agreements in a notional amount no greater
than the payments due with respect to the Indebtedness or currency being hedged;
(v) Purchase Money Indebtedness; (vi) Indebtedness secured only by office
buildings owned or occupied by the Company or any Restricted Subsidiary, which
Indebtedness does not exceed $10 million aggregate principal amount outstanding
at any one time; and (vii) Indebtedness of the Company or any Restricted
Subsidiary which, together with all other Indebtedness under this clause (vii),
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
-17-
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 $250,000 (other than a readily marketable
mortgage not exceeding $500,000) shall have been approved by the Board of
Directors of the Company or a committee thereof consisting of disinterested
members; and (vii) Investments in an aggregate amount outstanding not to exceed
$50 million.
"Permitted Liens" means (i) Liens for taxes, assessments or
----------------
governmental or quasi-government charges or claims that 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, (ii) statutory Liens of
landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other Liens imposed by law and arising in the ordinary course of
business and with respect to amounts that, to the extent applicable, either (a)
are not yet delinquent or (b) are being contested in good faith by appropriate
proceedings and as to which appropriate reserves have been established or other
provisions have been made in accordance with GAAP, if required, (iii) Liens
(other than any Lien imposed by the 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, (iv) Liens incurred or deposits made to secure the
performance of tenders, bids, leases, statutory obligations, surety and appeal
bonds, development obligations, progress payments, government contacts and other
obligations of like nature (exclusive of obligations for the payment of borrowed
money but including the items referred to in the parenthetical in clause (i)(a)
of the definition of "Indebtedness"), in each case incurred in the ordinary
course of business of the Company and the Restricted Subsidiaries, (v)
attachment or judgment Liens not giving rise to a Default or an Event of
Default, (vi) easements, rights-of-way, restrictions and other similar charges
or encumbrances not materially interfering with the ordinary
-18-
course of business of the Company and the Restricted Subsidiaries, (vii) zoning
restrictions, licenses, restrictions on the use of real property or minor
irregularities in title thereto, which do not materially impair the use of such
real property in the ordinary course of business of the Company and the
Restricted Subsidiaries, (viii) Liens securing Indebtedness permitted under
clause (vi) of the definition of Permitted Indebtedness, (ix) Liens securing
Indebtedness of the Company or any Restricted Subsidiary permitted to be
incurred under the Indenture; provided, that the aggregate amount of all
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 secured by
Liens) shall not exceed 40% of Consolidated Adjusted Tangible Assets at any one
time outstanding (after giving effect to the incurrence of such Indebtedness and
the use of the proceeds thereof), (x) Liens securing Non-Recourse Indebtedness
of the Company or any Restricted Subsidiary; provided that such Liens apply only
to the property financed out of the net proceeds of such Non-Recourse
Indebtedness within 90 days after the incurrence of such Non-Recourse
Indebtedness, (xi) Liens securing Purchase Money Indebtedness; provided that
such Liens apply only to the property acquired, constructed or improved with the
proceeds of such Purchase Money Indebtedness within 90 days after the incurrence
of such Purchase Money Indebtedness, (xii) Liens on property or assets of the
Company or any Restricted Subsidiary securing Indebtedness of the Company or any
Restricted Subsidiary owing to the Company or one or more Restricted
Subsidiaries, (xiii) leases or subleases granted to others not materially
interfering with the ordinary course of business of the Company and the
Restricted Subsidiaries, (xiv) purchase money security interests (including,
without limitation, Capitalized Lease Obligations); provided that such Liens
apply only to the Property acquired and the related Indebtedness is incurred
within 90 days after the acquisition of such Property, (xv) any option, contract
or other agreement to sell an asset; provided such sale is not otherwise
prohibited under the Indenture, (xvi) any right of a lender or lenders to which
the Company or a Restricted Subsidiary may be indebted to offset against, or
appropriate and apply to the payment of such, Indebtedness any and all balances,
credits, deposits, accounts or money of the Company or a Restricted Subsidiary
with or held by such lender or lenders or its Affiliates, (xvii) any pledge or
deposit of cash or property in conjunction with obtaining surety, performance,
completion or payment bonds and letters of credit or providing xxxxxxx money
obligations, escrows or similar purpose undertakings or indemnifications in the
ordinary course of business of the
-19-
Company and its Restricted Subsidiaries, (xviii) Liens for homeowner and
property owner association developments and assessments and (xix) Liens securing
Refinancing Indebtedness; provided that such Liens extend only to the assets
securing the Indebtedness being refinanced.
"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 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.
"Real Estate Business" means homebuilding, housing
--------------------
construction, real estate development or construction and related real estate
activities, but excluding provision of mortgage financing or title insurance.
"Refinancing Indebtedness" means Indebtedness (to the extent
-------------------------
not Permitted Indebtedness) that refunds, refinances or
-20-
extends any Indebtedness of the Company or any Restricted Subsidiary (to the
extent not Permitted Indebtedness) outstanding on the Issue Date or other
Indebtedness (to the extent not Permitted Indebtedness) permitted to be incurred
by the Company or any Restricted Subsidiary pursuant to the terms of this
Indenture, but only to the extent that (i) the Refinancing Indebtedness is
subordinated to the Notes or the Guarantees, as the case may be, to the same
extent as the Indebtedness being refunded, refinanced or extended, if at all,
(ii) the Refinancing Indebtedness is scheduled to mature either (a) no earlier
than the Indebtedness being refunded, refinanced or extended or (b) after the
maturity date of the Notes, (iii) the portion, if any, of the Refinancing
Indebtedness that is scheduled to mature on or prior to the maturity date of the
Notes has a Weighted Average Life to Maturity at the time such Refinancing
Indebtedness is incurred that is equal to or greater than the Weighted Average
Life to Maturity of the portion of the Indebtedness being refunded, refinanced
or extended that is scheduled to mature on or prior to the maturity date of the
Notes, and (iv) such 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).
"Restricted Subsidiary" means any Subsidiary of the Company
---------------------
which is not an Unrestricted Subsidiary.
"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.
-21-
"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
this 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 3.03 hereof, to the extent provided therein, (ii) the Company must be
permitted under Section 3.03 hereof to make the Restricted Payment deemed to
have been made pursuant to clause (i), and (iii) after giving effect to such
designation, no Default or Event of Default shall have occurred and be
continuing. 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,
--------
-22-
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,
(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 and
(iii) the Liens of such Unrestricted Subsidiary as of the date of such
redesignation could then be incurred in accordance with Section 3.07 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
-23-
part of such holder's Notes on a date (the "Repurchase Date") that is no later
---------------
than 60 days after notice of the Change of Control, at 101% of the principal
amount thereof plus accrued interest to the Repurchase Date.
(b) On or before the thirtieth day after any Change of
Control, the Company is obligated to mail, or cause to be mailed, to all holders
of record of Notes a notice regarding the Change of Control and the repurchase
right. The notice shall state the Repurchase Date, the date by which the
repurchase right must be exercised, the price for the Notes and the procedure
which the holder must follow to exercise such right. Substantially
simultaneously with mailing of the notice, the Company shall cause a copy of
such notice to be published in a newspaper of general circulation in the Borough
of Manhattan, The City of New York. To exercise such right, the holder of such
Note must deliver at least ten days prior to the Repurchase Date written notice
to the Company (or an agent designated by the Company for such purpose) of the
holder's exercise of such right, together with the Note with respect to which
the right is being exercised, duly endorsed for transfer; provided, however,
that if mandated by applicable law, a holder may be permitted to deliver such
written notice nearer to the Repurchase Date than may be specified by the
Company.
(c) The Company will comply with applicable law, including
Section 14(e) of the Exchange Act and Rule 14e-1 thereunder, if applicable, if
the Company is required to give a notice of right of repurchase as a result of a
Change of Control.
Section 3.02. Limitations on Indebtedness.
---------------------------
(a) The Company will not, and will not cause or permit any Restricted
Subsidiary, directly or indirectly, to, create, incur, assume, become liable for
or guarantee the payment of (collectively, an "incurrence") any Indebtedness
(including Acquired Indebtedness) unless, after giving effect thereto and the
application of the proceeds therefrom, the Consolidated Fixed Charge Coverage
Ratio on the date thereof would be at least 2.0 to 1.0.
(b) Notwithstanding the foregoing, the provisions of this Supplemental
Indenture will not prevent the incurrence of: (i) Permitted Indebtedness, (ii)
Refinancing Indebtedness, (iii) Non-Recourse Indebtedness, (iv) any Guarantee of
Indebtedness of the Company represented by the Notes and (v) any guarantee of
Indebtedness incurred under Credit Facilities in compliance with this Indenture.
-24-
(c) For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness may be incurred through the first paragraph
of this covenant or by meeting the criteria of one or more of the types of
Indebtedness described in the second paragraph of this covenant (or the
definitions of the terms used therein), the Company, in its sole discretion, (i)
may classify such item of Indebtedness under and comply with either of such
paragraphs (or any of such definitions), as applicable, (ii) may classify and
divide such item of Indebtedness into more than one of such paragraphs (or
definitions), as applicable, and (iii) may elect to comply with such paragraphs
(or definitions), as applicable, in any order.
(d) The Company will not, and will not cause or permit any Guarantor
to, directly or indirectly, in any event incur any Indebtedness that purports to
be by its terms (or by the terms of any agreement governing such Indebtedness)
subordinated to any other Indebtedness of the Company or of such Guarantor, as
the case may be, unless such Indebtedness is also by its terms (or by the terms
of any agreement governing such Indebtedness) made expressly subordinated to the
Notes or the Guarantee of such Guarantor, as the case may be, to the same extent
and in the same manner as such Indebtedness is subordinated to such other
Indebtedness of the Company or such Guarantor, as the case may be.
Section 3.03. Limitations on Restricted Payments.
----------------------------------
(a) 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) hereof; and
iii) immediately after giving effect to such Restricted Payment,
the aggregate amount of all Restricted Payments (including the Fair Market Value
of any non-cash Restricted Payment) declared or made after the Issue Date does
not exceed the sum of (a) 50% of the Consolidated Net Income of the Company on a
cumulative basis during the period (taken as one accounting period) from and
including the fiscal quarter of the Company in which the Issue Date occurs and
ending on the
-25-
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 the Issue Date or
any issue or sale after the Issue Date of Qualified Stock (other than to any
Subsidiary of the Company) and (2) the issue or sale after the Issue Date of any
Indebtedness or other securities of the Company convertible into or exercisable
for Qualified Stock of the Company that have been so converted or exercised, as
the case may be, plus (c) in the case of the disposition or repayment of any
Investment constituting a Restricted Payment made after the Issue Date, an
amount (to the extent not included in the calculation of the Consolidated Net
Income referred to in (a)) equal to the lesser of (x) the return of capital with
respect to such Investment (including by dividend, distribution or sale of
Capital Stock) and (y) the amount of such Investment that was treated as a
Restricted Payment, in either case, less the cost of the disposition or
repayment of such Investment (to the extent not included in the calculation of
the Consolidated Net Income referred to in (a)), plus (d) with respect to any
Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary after
the Issue Date 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 the Issue Date 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 (e) $20 million.
(b) Clauses (ii) and (iii) of paragraph (a) will not prohibit: (A) the
payment of any dividend within 60 days of its declaration if such dividend could
have been made on the date of its declaration without violation of the
provisions of this Indenture; (B) the repurchase, redemption or retirement of
any shares of Capital Stock of the Company in exchange for, or out of the net
proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company) of, other shares of Qualified Stock; and (C) the purchase, redemption
or other acquisition, cancellation or retirement for value of Capital Stock, or
-26-
options, warrants, equity appreciation rights or other rights to purchase or
acquire Capital Stock, of the Company or any Subsidiary held by officers or
employees or former officers or employees of the Company or any Subsidiary (or
their estates or beneficiaries under their estates) not to exceed $10 million in
the aggregate since the Issue Date; provided, however, that each Restricted
Payment described in clauses (A) and (B) of this sentence shall be taken into
account for purposes of computing the aggregate amount of all Restricted
Payments pursuant to clause (iii) of paragraph (a).
(c) For purposes of determining the aggregate and permitted
amounts of Restricted Payments made, the amount of any guarantee of any
Investment in any Person that was initially treated as a Restricted Payment and
which was subsequently terminated or expired, net of any amounts paid by the
Company or any Restricted Subsidiary in respect of such guarantee, shall be
deducted.
(d) In determining the "fair market value of Property" for
purposes of clause (iii) of the paragraph (a), Property other than cash, Cash
Equivalents and Marketable Securities shall be deemed to be equal in value to
the "equity value" of the Capital Stock or other securities issued in exchange
therefor. The "equity value" of such Capital Stock or other securities shall be
equal to (i) the number of shares of Common Equity issued in the transaction (or
issuable upon conversion or exercise of the Capital Stock or other securities
issued in the transaction) multiplied by the closing sale price of the Common
Equity on its principal market on the date of the transaction (less, in the case
of Capital Stock or other securities which require the payment of consideration
at the time of conversion or exercise, the aggregate consideration payable
thereupon) or (ii) if the Common Equity is not then traded on the New York Stock
Exchange, American Stock Exchange or Nasdaq National Market, or if the Capital
Stock or other securities issued in the transaction 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 3.04. Limitations on Transactions with Affiliates.
-------------------------------------------
(a) The Company will not, and will not cause or permit any Restricted
Subsidiary to, make any loan, advance, guar-
-26-
xxxxx 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 $5 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 $25 million,
the Company shall have (x) obtained the approval of a majority of the Board of
Directors of the Company and (y) delivered to the Trustee an opinion of a
qualified independent financial advisor to the effect that such Affiliate
Transaction is fair to the Company or such Restricted Subsidiary, as the case
may be, from a financial point of view.
(c) Notwithstanding the foregoing, an Affiliate Transaction
will not include (i) any contract, agreement or understanding with, or for the
benefit of, or plan for the benefit of employees of the Company or its
Subsidiaries generally (in their capacities as such) that has been approved by
the Board of Directors of the Company, (ii) Capital Stock issuances to
directors, officers and employees of the Company or its Subsidiaries pursuant to
plans approved by the stockholders of the Company, (iii) any Restricted Payment
otherwise permitted under the "Limitations on Restricted Payments" covenant,
(iv) any transaction between or among the Company and one or more Re-
-28-
stricted 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 3.05. Limitations on Dispositions of Assets.
-------------------------------------
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 subordinated Indebtedness) of the Company or any Restricted Subsidiary
that is actually assumed by the transferee in such Asset Disposition shall be
deemed to be consideration required by clause (y) above for purposes of
determining the percentage of such consideration received by the Company or the
Restricted Subsidiaries. The Net Cash Proceeds of an Asset Disposition shall,
within one year, at the Company's election, (a) be used by the Company or a
Restricted Subsidiary in the business of the construction and sale of homes
conducted by the Company and the Restricted Subsidiaries or any other business
of the Company or a Restricted Subsidiary existing at the time of such Asset
Disposition or (b) to the extent not so used, be applied to make a Net Cash
Proceeds Offer to purchase Notes and, if the Company or a Restricted Subsidiary
elects or is required to do so, repay any other unsubordinated Indebtedness (on
a pro rata basis if the amount available for such repurchase and repayment is
less than the aggregate amount of (i) the principal amount of the Notes tendered
in such Net Cash Proceeds Offer and (ii) the lesser of the principal amount, or
accreted value, of such other unsubordinated Indebtedness, plus, in each case
accrued interest to the date of repurchase or repayment) 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
-29-
Notes in accordance with clause (b) of the preceding sentence except to the
extent that such Net Cash Proceeds, together with the aggregate Net Cash
Proceeds of prior Asset Dispositions (other than those so used) which have not
been applied in accordance with this provision and as to which no prior Net Cash
Proceeds Offer shall have been made, exceed 5% of Consolidated Tangible Assets
and (B) in connection with any Asset Disposition, the Company and the Restricted
Subsidiaries will not be required to comply with the requirements of clause (y)
of the first sentence of this paragraph to the extent that the aggregate non-
cash consideration received in connection with such Asset Disposition, together
with the sum of all non-cash consideration received in connection with all prior
Asset Dispositions that has not yet been 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 3.06. Limitation on Issuance of Preferred Stock of Restricted
Subsidiaries.
-------------------------------------------------------
The Company will not permit any Restricted Subsidiary to issue
any Preferred Stock (except to the Company or a Restricted Subsidiary) or permit
any Person (other than the Company or a Restricted Subsidiary) to own any
Preferred Stock of any Restricted Subsidiary.
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 this Indenture and the Notes
are secured on an equal and ratable basis with the obligation or liability so
secured until such time as such obligation or liability is no longer secured by
a Lien.
Section 3.08. 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 provi-
-30-
sions of leases and other agreements that restrict the assignability thereof) on
the ability of any Restricted Subsidiary to (i) pay dividends or make any other
distributions on its Capital Stock or any other interest or participation in, or
measured by, its profits, owned by the Company or any other Restricted
Subsidiary, or pay interest on or principal of any Indebtedness owed to the
Company or any other Restricted Subsidiary, (ii) make loans or advances to the
Company or any other Restricted Subsidiary, or (iii) transfer any of its
properties or assets to the Company or any other Restricted Subsidiary, except
for (a) encumbrances or restrictions existing under or by reason of applicable
law, (b) covenants or restrictions contained in Indebtedness in effect on the
date of this Indenture as such covenants or restrictions are in effect on such
date, (c) any restrictions or encumbrances arising under Acquired Indebtedness;
provided, that such encumbrance or restriction applies only to either the assets
--------
that were subject to the restriction or encumbrance at the time of the
acquisition or the obligor on such Indebtedness and its Subsidiaries, (d) any
restrictions or encumbrances arising in connection with Refinancing
Indebtedness; provided, however, that any restrictions and encumbrances of the
-------- -------
type described in this clause (d) that arise under such Refinancing Indebtedness
shall not be materially more restrictive than those under the agreement creating
or evidencing the Indebtedness being refunded, refinanced, replaced or extended,
(e) any Permitted Lien, or any other agreement restricting the sale or other
disposition of property, securing Indebtedness permitted by this Indenture if
such Permitted Lien or agreement does not expressly restrict the ability of a
Subsidiary of the Company to pay dividends or make or repay loans or advances
prior to default thereunder, (f) reasonable and customary borrowing base
covenants set forth in agreements evidencing Indebtedness otherwise permitted 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,
-31-
without limitation, by way of liquidation or dissolution), or assign any of its
obligations under the Notes, the Guarantees or this Indenture (as an entirety or
substantially in one transaction or in a series of related transactions), to any
Person (in each case other than in a transaction in which the Company or a
Restricted Subsidiary is the survivor of a consolidation or merger, or the
transferee in a sale, lease, conveyance or other disposition) unless: (i) the
Person formed by or surviving such consolidation or merger (if other than the
Company or the Guarantor, as the case may be), or to which such sale, lease,
conveyance or other disposition or assignment will be made (collectively, the
"Successor"), is a corporation or other legal entity organized and existing
---------
under the laws of the United States or any state thereof or the District of
Columbia, and the Successor assumes by supplemental indenture in a form
reasonably satisfactory to the Trustee all of the obligations of the Company or
the Guarantor, as the case may be, under the Notes or a Guarantee, as the case
may be, and the Indenture, (ii) immediately after giving effect to such
transaction, no Default or Event of Default has occurred and is continuing,
(iii) immediately after giving effect to such transaction and the use of any net
proceeds therefrom, on a pro forma basis, the Consolidated Net Worth of the
--- -----
Company or the Successor (in the case of a transaction involving the Company),
as the case may be, would be at least equal to the Consolidated Net Worth of the
Company immediately prior to such transaction (exclusive of any adjustments to
Consolidated Net Worth attributable to transaction costs) less any amount
treated as a Restricted Payment in connection with such transaction in
accordance with this Indenture and (iv) immediately after giving effect to such
transaction, the Company could incur at least $1.00 of Indebtedness pursuant to
Section 3.02(a) hereof. The foregoing provisions shall not apply to (i) a
transaction involving the sale or disposition of Capital Stock of a Guarantor,
or the consolidation or merger of a Guarantor, or the sale, lease, conveyance or
other disposition of all or substantially all of the assets of a Guarantor, that
in any such case results in such Guarantor being released from its Guarantee
pursuant to the Indenture or (ii) a transaction the purpose of which is to
change the state of incorporation of the Company or any Guarantor.
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
-32-
documents within 15 days after it files them with the Commission. In the event
that the Company is no longer subject to these periodic requirements of the
Exchange Act, it will nonetheless continue to file reports with the Commission
and the Trustee and mail such reports to each holder of Notes as if it were
subject to such reporting requirements. Regardless of whether the Company is
required to furnish such reports to its stockholders pursuant to the Exchange
Act, the Company will cause its consolidated financial statements and a
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" written report, similar to those that would have been required to
appear in annual or quarterly reports, to be delivered to holders of Notes.
ARTICLE FOUR
Miscellaneous
Section 4.01. Governing Law.
-------------
The laws of the State of New York shall govern this Supplemental
Indenture, the Securities of each Series and the Guarantees.
Section 4.02. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Supplemental Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or a Subsidiary. Any such
indenture, loan or debt agreement may not be used to interpret this Supplemental
Indenture.
Section 4.03. No Recourse Against Others.
--------------------------
All liability described in paragraph 13 of the Notes of any
director, officer, employee or stockholder, as such, of the Company 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.
-33-
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.
-34-
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:
Title:
GUARANTORS:
DRHI, Inc.
DRH Construction, Inc.
DRH New Mexico Construction, Inc.,
X.X. Xxxxxx Denver Management Company, Inc.
X.X. Xxxxxx Denver Xx. 00, Xxx.
X.X. Xxxxxx Xxxxxx Xx. 00, Inc.
X.X. Xxxxxx Denver Xx. 00, Xxx.
X.X. Xxxxxx Xxxxxx Xx. 00, Inc.
X.X. Xxxxxx Denver Xx. 00, Xxx.
X.X. Xxxxxx Xxxxxx Xx. 00, Inc.
X.X. Xxxxxx Denver Xx. 00, Xxx.
X.X. Xxxxxx Xxxxxx Xx. 00, Inc.
X.X. Xxxxxx Denver No. 18, Inc.
X.X. Xxxxxx, Inc.-Albuquerque
X.X. Xxxxxx, Inc.- Denver
X.X. Xxxxxx, Inc.-Minnesota
X.X. Xxxxxx, Inc.-New Jersey
Xxxxxxx I, Ltd.
Xxxxxxx II, Ltd.
Xxxxxxx III, Ltd.
Xxxxxxx IX, Inc.
Xxxxxxx X, Inc.
X.X. Xxxxxx Los Angeles Holding Company, Inc.
X.X. Xxxxxx Los Angeles Management Company,
Inc.
X.X. Xxxxxx Los Angeles No. 9, Inc.
X.X. Xxxxxx Los Angeles No. 10, Inc.
X.X. Xxxxxx Los Angeles No. 11, Inc.
X.X. Xxxxxx Los Angeles No. 12, Inc.
-00-
X.X. Xxxxxx Xxx Xxxxxxx No. 13, Inc.
X.X. Xxxxxx Los Angeles No. 14, Inc.
X.X. Xxxxxx Los Angeles No. 16, Inc.
X.X. Xxxxxx Los Angeles No. 17, Inc.
X.X. Xxxxxx, Inc. - Birmingham
X.X. Xxxxxx, Inc. - Greensboro
X.X. Xxxxxx San Diego Holding Company, Inc.
X.X. Xxxxxx San Diego Management Company,
Inc.
X.X. Xxxxxx San Diego No. 9, Inc.
X.X. Xxxxxx San Diego Xx. 00, Xxx.
X.X. Xxxxxx Xxx Xxxxx Xx. 00, Inc.
X.X. Xxxxxx San Diego Xx. 00, Xxx.
X.X. Xxxxxx Xxx Xxxxx Xx. 00, Inc.
X.X. Xxxxxx San Diego Xx. 00, Xxx.
X.X. Xxxxxx Xxx Xxxxx Xx. 00, Inc.
X.X. Xxxxxx San Diego Xx. 00, Xxx.
X.X. Xxxxxx Xxx Xxxxx Xx. 00, Inc.
X.X. Xxxxxx San Diego Xx. 00, Xxx.
X.X. Xxxxxx Xxx Xxxxx Xx. 00, Inc.
X.X. Xxxxxx San Diego No. 20, Inc.
X.X. Xxxxxx San Diego No. 21, Inc.
X.X. Xxxxxx, Inc. - Torrey
X. X. Xxxxxx Atlanta, Ltd.
By:
-----------------------------------------
Name:
Title:
-36-
SGS COMMUNITIES AT GRANDE QUAY, LLC
By Xxxxxxx IX, Inc., a member
By:
-------------------------
Name:
Title:
and
By Xxxxxxx X, Inc., a member
By:
-------------------------
Name:
Title:
X.X. XXXXXX MANAGEMENT COMPANY, LTD.
By Xxxxxxx I, Ltd., its general partner
By:
-------------------------
Name:
Title:
-00-
X.X. XXXXXX - XXXXX, LTD.
By Xxxxxxx I, Ltd., its general partner
By:
-------------------------
Name:
Title:
X.X. XXXXXX - ROYALTY, LTD.
By Xxxxxxx I, Ltd., its general partner
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
-38-
AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Trustee
By:
-----------------------------
Name:
Title:
(SEAL)
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.: _______
8 3/8% Senior Notes due 2004
X.X. XXXXXX, INC.
a Delaware corporation
promises to pay to
or registered assigns
the principal sum of Dollars on June 15, 2004
Interest Payment Dates: June 15 and December 15, commencing December 15, 1997
Interest Record Dates: June 1 and December 1
Authenticated: Dated:
X.X. XXXXXX, INC.
[Seal]
By:
------------------------
Title:
By:
------------------------
Title:
American Stock Transfer & Trust
Company, as Trustee, certifies that this
is one of the Securities referred to in
the within mentioned Indenture.
By:
----------------------------
Authorized Signatory
A-2
X.X. XXXXXX, INC.
8 3/8% Senior Notes due 2004
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 June 15 and December
15 of each year, commencing December 15, 1997, 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
June 1 and December 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.
A-3
4. Indenture.
---------
The Company issued the Securities under an Indenture dated as of June
9, 1997 ("Indenture") among the Company, the Guarantors and the Trustee, as
supplemented by a First Supplemental Indenture dated as of June 9, 1997 (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 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. The Company may redeem Securities, at any time prior to June
15, 2000, with the net cash proceeds of one or more Public Equity Offerings by
the Company, at a redemption price equal to 108.375% of the principal amount of
such Securities, plus accrued and unpaid interest, if any, to the date of
redemption; provided, however, that after each such redemption not less than
-------- -------
$97,500,000 principal amount of Securities (including any Additional Securities
but 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 in-
A-4
terest, 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 of $1,000. A Holder may transfer
or exchange Securities by presentation of such Securities to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
equal principal amount of Securities of other denominations. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Security selected
for redemption, except the unredeemed part thereof if the Security is redeemed
in part, or transfer or exchange any Securities for a period of 15 days before a
selection of Securities to be redeemed.
7. Persons Deemed Owners.
---------------------
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 or the Securities may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the outstanding Securities and any past default or
compliance with any provision relating to the Securities may be waived in a
particular instance with the consent of the Holders of a majority in principal
amount of the outstanding Securities. Without the consent of any Securityholder,
the Company and the Trustee may amend or supplement the Indenture or the
Securities to cure any ambiguity, defect or inconsistency, to provide for
uncerti-
A-5
ficated 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.
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When a successor corporation assumes all the obligations of its
predecessor under the Securities and the Indenture, the predecessor corporation
will be released from those obligations.
11. Trustee Dealings With Company.
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American Stock Transfer & Trust Company, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its affiliates, and may
otherwise deal with the Company or its affiliates, as if it were not Trustee.
12. No Recourse Against Others.
--------------------------
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.
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This Security shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Security.
A-6
15. Abbreviations.
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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)
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and irrevocably appoint
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agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
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Date: Your signature:
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(Sign exactly as your name appears
on the other side of this Security)
Signature Guarantee:
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[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.
[Guarantors]
By:
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Title:
