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EXHIBIT 10(j)
INDENTURE
$8,000,000
13% SENIOR SUBORDINATED NOTES
DUE 2001
AS OF OCTOBER 17, 1994
MONTEREY MANAGEMENT, INC.
AND
MONTEREY HOMES CORPORATION
2
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Other Provisions
of General Application .............................................. 1
Section 1.1. Definitions ................................... 1
Section 1.2. Compliance Certificate and Opinions ........... 14
Section 1.3. Form of Documents Delivered to Trustee ........ 14
Section 1.4. Acts of Holders ............................... 15
Section 1.5. Notices, etc. to Trustee and Company .......... 15
Section 1.6. Notices to Holders; Waiver .................... 16
Section 1.7. Conflict with Trust Indenture Act ............. 16
Section 1.8. Effect of Headings and Tables of Contents ..... 16
Section 1.9. Successors and Assigns ........................ 16
Section 1.10. Separability Clause ........................... 16
Section 1.11. Benefits of Indenture ......................... 16
Section 1.12. Governing Law ................................. 17
ARTICLE 2
Note Form ........................................................... 17
Section 2.1. Form Generally ................................ 17
Section 2.2. Form of Face of Note .......................... 17
Section 2.3. Authentication ................................ 18
Section 2.4. Form of Reverse of Note ....................... 18
Section 2.5. Form of Trustee's Certificate of Authentication 22
ARTICLE 3
The Notes ........................................................... 22
Section 3.1. Title and Terms ............................... 22
Section 3.2. Denominations ................................. 23
Section 3.3. Execution, Authentication and Delivery ........ 23
Section 3.4. Temporary Notes ............................... 24
Section 3.5. Registration, Transfer and Exchange ........... 24
Section 3.6. Mutilated, Destroyed, Lost or Stolen Notes .... 25
Section 3.7. Persons Deemed Owners ......................... 26
Section 3.8. Cancellation .................................. 26
Section 3.9. Authentication and Delivery of Notes .......... 26
Section 3.10. Paying Agent to Hold Money in Trust ........... 26
Section 3.11. Payment of Interest; Interest Rights Preserved 27
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ARTICLE 4
Discharge Of Indenture ............................................................... 28
Section 4.1. Termination of Company's Obligations ........................... 28
Section 4.2. Application of Trust Money ..................................... 29
Section 4.3. Repayment to Company ........................................... 29
Section 4.4. Reinstatement .................................................. 30
Section 4.5. Survival of Certain Obligations ................................ 30
ARTICLE 5
Remedies ............................................................................. 30
Section 5.1. Events of Default .............................................. 30
Section 5.2. Interest Rate Upon Default ..................................... 32
Section 5.3. Acceleration of Maturity; Rescission and Annulment ............. 32
Section 5.4. Collection of Indebtedness and Suits for Enforcement by Trustee 32
Section 5.5. Trustee May File Proofs of Claim ............................... 33
Section 5.6. Trustee May Enforce Claims Without Possession of Notes ......... 34
Section 5.7. Application of Money Collected ................................. 34
Section 5.8. Limitation on Suits ............................................ 34
Section 5.9. Unconditional Right of Holders to Receive Principal, Premium and
Interest ....................................................... 35
Section 5.10. Restoration of Rights and Remedies ............................. 35
Section 5.11. Rights and Remedies Cumulative ................................. 35
Section 5.12. Delay or Omission Not Waiver ................................... 35
Section 5.13. Control by Holders ............................................. 36
Section 5.14. Waiver of Past Defaults ........................................ 36
Section 5.15. Undertaking for Costs .......................................... 36
Section 5.16. Waiver of Stay or Extension Laws ............................... 36
ARTICLE 6
The Trustee .......................................................................... 37
Section 6.1. Duties of Trustee .............................................. 37
Section 6.2. Rights of Trustee .............................................. 38
Section 6.3. Individual Rights of Trustee ................................... 38
Section 6.4. Trustee's Disclaimer ........................................... 39
Section 6.5. Notice of Defaults ............................................. 39
Section 6.6. Compensation and Indemnity ..................................... 39
Section 6.7. Replacement of Trustee ......................................... 40
Section 6.8. Successor Trustee by Xxxxxx, etc ............................... 40
Section 6.9. Eligibility; Disqualification .................................. 41
Section 6.10. Preferential Collection of Claims Against Company .............. 41
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ARTICLE 7
Holders' Lists and Reports by Trustee and Company ............................. 41
Section 7.1. Company to Furnish Trustee Names and Addresses of Holders 41
Section 7.2. Preservation of Information: Communications to Holders ... 41
Section 7.3. Reports by Trustee ....................................... 42
Section 7.4. Reports by Company ....................................... 43
ARTICLE 8
Consolidation, Xxxxxx, Conveyance or Transfer ................................. 43
Section 8.1. Company and Guarantor May Consolidate, etc., Only on
Certain
Terms .................................................... 43
Section 8.2. Successor Corporation Substituted ........................ 44
Section 8.3. Notes to be Secured in Certain Events .................... 44
ARTICLE 9
Supplemental Indentures ....................................................... 45
Section 9.1. Supplemental Indentures Without Consent of Holders ...... 45
Section 9.2. Supplemental Indentures with Consent of Holders ......... 45
Section 9.3. Execution of Supplemental Indentures .................... 46
Section 9.4. Effect of Supplemental Indentures ....................... 46
Section 9.5. Conformity with Trust Indenture Act ..................... 46
Section 9.6. Reference in Notes to Supplemental Indentures ........... 46
ARTICLE 10
Covenants ..................................................................... 47
Section 10.1. Payment of Notes ........................................ 47
Section 10.2. Commission Reports ...................................... 47
Section 10.3. Compliance Certificates ................................. 48
Section 10.4. Maintenance of Office or Agency ......................... 49
Section 10.5. Corporate Existence ..................................... 49
Section 10.6. Waiver of Stay, Extension or Usury Laws ................. 49
Section 10.7. Payment of Taxes and Other Claims ....................... 49
Section 10.8. Maintenance of Properties and Insurance; Line of Business 50
Section 10.9. Limitation on Incurrence of Additional Indebtedness ..... 50
Section 10.10. Limitation on Restricted Payments ....................... 51
Section 10.11. Limitation on Sale of Assets ............................ 53
Section 10.12. Limitation on Liens Securing Indebtedness ............... 54
Section 10.13. Limitation on Payment Restrictions Affecting Subsidiaries 54
Section 10.14. Limitation on Transactions with Affiliates .............. 55
Section 10.15. Limitation on Future Senior Subordinated Indebtedness ... 56
Section 10.16. Change of Control ....................................... 56
Section 10.18. Election of Outside Directors ........................... 59
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ARTICLE 11
Subordination of Notes ................................................................ 59
Section 11.1. Notes Subordinated to Senior Indebtedness ...................... 59
Section 11.2. No Payment an Notes in Certain Circumstances ................... 60
Section 11.3. Notes Subordinated to Prior Payment of All Senior Indebtedness on
Dissolution, Liquidation or Reorganization of the Company ...... 61
Section 11.4. Holders to Be Subrogated to Rights of Holders of Senior
Indebtedness ................................................... 62
Section 11.5. Obligations of the Company Unconditional ....................... 62
Section 11.6. Trustee Entitled to Assume Payments Not Prohibited in Absence of
Notice ......................................................... 63
Section 11.7. Application by Trustee of Assets Deposited With It ............. 63
Section 11.8. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness ...................... 63
Section 11.9. Holders Authorize Trustee to Effectuate Subordination of Notes . 63
Section 11.10. Right of Trustee to Hold Senior Indebtedness ................... 64
Section 11.11. Article 11 Not to Prevent Events of Default .................... 64
Section 11.12. Payment ........................................................ 64
ARTICLE 12
Redemption of Notes ................................................................... 64
Section 12.1. Right of Redemption and Redemption Prices ....................... 64
Section 12.2. Notice of Redemption; Partial Redemption ........................ 65
Section 12.3. Payment of Notes called for Redemption .......................... 66
Section 12.4. Redemption Moneys to be Deposited with Trustee or Paying
Agents .......................................................f... 66
ARTICLE 13
Guarantee ............................................................................. 66
Section 13.1. Unconditional Guarantee ......................................... 66
Section 13.2. Guarantor May Consolidate, etc., on Certain Terms ............... 67
Section 13.3. Release of the Guarantor or a Subsidiary Guarantor .............. 68
Section 13.4. Limitation Guarantor's Liability ................................ 69
Section 13.5. Contribution .................................................... 69
Section 13.6. Execution and Delivery .......................................... 69
Section 13.7. Severability .................................................... 69
ARTICLE 14
Subordination of Guarantee ............................................................ 70
Section 14.1. Guarantee Subordinated to Senior Indebtedness .................... 70
Section 14.2. No Payment on Guarantee in Certain Circumstances ................. 70
Section 14.3. Guarantee Subordinated to Prior Payment of all Senior Indebtedness
on Dissolution, Liquidation or Reorganization of a Guarantor ..... 71
Section 14.4. Holders to be Subrogated to Rights of Holders of Senior
Indebtedness .................................................... 72
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Section 14.5. Guarantee Unconditional ..................................... 72
Section 14.6. Trustee Entitled to Assume Payments Not Prohibited in Absence
of Notice ................................................... 72
Section 14.7. Application by Trustee of Assets Deposited With It .......... 73
Section 14.8. Subordination Rights Not Impaired by Acts or Omissions of
Guarantors or Holders of Senior Indebtedness ................ 73
Section 14.9. Holders Authorize Trustee to Effectuate Subordination of
Notes ....................................................... 73
Section 14.10. Right of Trustee to Hold Senior Indebtedness ................ 74
Section 14.11. Payment ..................................................... 74
Section 14.12. Article 14 Not to Prevent Events of Default ................. 74
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MONTEREY MANAGEMENT, INC.
Reconciliation between Indenture
dated as of _____________, 1994 and Trust Indenture Act of 1939
Trust Indenture Act Section Indenture Section
Section 310 (a)(1) ................................................... 6.9
(a)(2) ................................................... 6.9
(a)(3) ................................................... Not Applicable
(a)(4) ................................................... Not Applicable
(a)(5) ................................................... 6.7
(b) ...................................................... 6.7, 6.9
(c) ...................................................... Not Applicable
Section 311 (a) ...................................................... 6.10
(b) ...................................................... 6.10
(c) ...................................................... Not Applicable
Section 312 (a) ...................................................... 7.1, 7.2(a)
(b) ...................................................... 7.2(b)
(c) ...................................................... 7.2(c)
Section 313 (a) ...................................................... 7.3
(b)(1) ................................................... Not Applicable
(b)(2) ................................................... 7.3
(c) ...................................................... 7.3
(d) ...................................................... 7.3
Section 314 (a) ...................................................... 7.4, 10.2,10.3
(b) ...................................................... Not Applicable
(c)(1) ................................................... 1.2
(c)(2) ................................................... 1.2
(c)(3) ................................................... Not Applicable
(d) ...................................................... Not Applicable
(e) ...................................................... 1.2
(f) ...................................................... Not Applicable
Section 315 (a) ...................................................... 6.1(b)
(b) ...................................................... 6.5
(c) ...................................................... 6.1(a)
(d)(1) ................................................... 6.1(c)
(d)(2) ................................................... 6.1(c)(2)
(d)(3) ................................................... 6.1(c)(3)
(e) ...................................................... 5.15
Section 316 (a) ...................................................... 1.1
(a)(1)(A) ................................................ 5.3, 5.13
(a)(1)(B) ................................................ 5.14
(a)(2) ................................................... Not Applicable
(b) ...................................................... 5.4
(c) ...................................................... Not Applicable
Section 317 (a)(1) ................................................... 5.4
(a)(2) ................................................... 5.5
(b) ...................................................... 3.10
Section 318 (a) ...................................................... 1.7
(c) ...................................................... 1.7
NOTE: This reconciliation shall not, for any purpose, be deemed to be a part of
the Indenture.
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INDENTURE
INDENTURE dated as of October 17, 1994, among MONTEREY MANAGEMENT,
INC., an Arizona corporation (hereinafter the "Company"), having its principal
office at 0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000, and
MONTEREY HOMES CORPORATION, an Arizona corporation (hereinafter, the
"Guarantor"), having its principal office at 0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxx 00000 and BANK ONE, ARIZONA, NA, having its principal
office at Corporate Trust Department A 000, 000 Xxxxx Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxx, Xxxxxxx 00000, as Trustee (hereinafter, the "Trustee").
RECITALS OF THE COMPANY:
The Company is offering an issue of 80 Units, each unit consisting of
$100,000 Principal Amount of 13.0% Senior Subordinated Notes Due 2001
(hereinafter, the "Notes") and 5,000 Common Stock Purchase Warrants, for an
aggregate offering of $8,000,000. In connection therewith, the Company has duly
authorized the creation of the Notes of substantially the tenor and amount
hereinafter set forth, and, to provide therefor, the Company has duly authorized
the execution and delivery of this Indenture. The Common Stock Purchase Warrants
shall be governed by a Warrant Agreement entered into between the Company and
the transfer agent.
All things necessary to make the Notes, when executed by the Company
and authenticated and delivered by the Trustee hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
The Notes created by this Indenture are to consist of Notes in fully
registered form only, in a total principal amount of $8,000,000.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
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(1) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
and
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser
of (i) the amount by which the fair market value of the property of the
Guarantor under consideration exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after giving effect to
all other fixed and contingent liabilities incurred or assumed on such date),
but excluding liabilities under the Guarantee of the Guarantor at such date and
(ii) the amount by which the present fair saleable value of the assets of the
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of the Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities incurred or assumed on such date and
after giving effect to any collection from any Subsidiary of the Guarantor in
respect of the obligations of such Subsidiary under the Guarantee), excluding
debt in respect of the Guarantee of the Guarantor, as they become absolute and
matured.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing; provided, however, that the beneficial ownership of ten percent (10%)
of the Voting Stock of a Person shall be deemed to be control.
"Asset Sale" means any sale, lease, transfer, exchange or other
disposition (or series of related sales, leases, transfers, exchanges or
dispositions) of shares of Capital Stock of a Subsidiary (other than directors'
qualifying shares), or of property or assets or any interests therein (each
referred to for purposes of this definition as a "disposition") by the Company
or the Guarantor or any of their Subsidiaries, including any disposition by
means of a merger, consolidation or similar transaction (other than (i) by the
Company or the Guarantor to a Wholly Owned Subsidiary or by a Subsidiary to the
Company or the Guarantor or a Wholly Owned Subsidiary, (ii) a sale of land,
improved properties, services, inventories and assets in the ordinary course of
business of the Company's and the Guarantor's operations reasonably consistent
with past practices, and (iii) the disposition of all or substantially all of
the assets of the Company or the Guarantor in compliance with the covenant
captioned "Limitation on Sale of Assets"); provided, however, that any internal
reorganization of the Company and the Guarantor, and their respective
Subsidiaries into a single corporation or entity will not constitute an Asset
Sale.
"Average Life" means, as of the date of determination, with respect to
any Indebtedness, the quotient obtained by dividing (i) the sum of the product
of (x) the number of years from such date to the date of each successive
scheduled principal payment of such Indebtedness multiplied by (y) the amount of
such principal payment by (ii) the sum of all such principal payments.
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"Bank Credit Facility" means a revolving credit and/or letter of credit
facility, the proceeds of which are used for working capital and other general
corporate purposes entered into by one or more of the Company and/or its
Subsidiaries and certain financial institutions, as amended, extended or
refinanced from time to time.
"Board of Directors" means, with respect to any Person, either the
board of directors of such Person or any duly authorized committee of such
board, as the context indicates.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a legal holiday for banking institutions in Phoenix,
Arizona.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock or partnership interests and any and all warrants, options and rights with
respect thereto (whether or not currently exercisable), including each class of
common stock, preferred stock or capital stock equivalents of such Person.
"Capitalized Lease Obligations" of any Person, means the obligations
of such Person to pay rent or other amounts under a lease of property, real or
personal, that is required to be capitalized for financial reporting purposes in
accordance with GAAP, and the amount of such obligations shall be the
capitalized amount thereof determined in accordance with GAAP.
"Change of Control" means any event or series of events by which (i)
Messrs. Xxxxxxx X. Xxxxxxxx and Xxxxxx X. Xxxxxx would own an aggregate of less
than 50% of the total voting power of the Voting Stock of the Company if such
event or series of events occurs prior to or in connection with the Company
completing an initial public offering, if any, or if such event or series of
events occurs thereafter if a Person or Group beneficially owns, directly or
indirectly, more of the voting power of the Voting Stock of the Company than
Messrs. Cleverly and Hilton; (ii) the Company or the Guarantor consolidates with
or merges or amalgamates with or into another Person or conveys, transfers, or
leases all or substantially all of its assets to any Person, or any Person
consolidates with, or merges or amalgamates with or into the Company or the
Guarantor, in any such event pursuant to a transaction in which the outstanding
Voting Stock of the Company is changed into or exchanged for cash, securities or
other property, other than any such transaction where (A) the outstanding Voting
Stock of the Company is changed into or exchanged for Voting Stock of the
surviving corporation which is not Disqualified Stock and (B) the holders of the
Voting Stock of the Company or the Guarantor, as the case may be, immediately
prior to such transaction own, directly or indirectly, not less than a majority
of the Voting Stock of the surviving corporation immediately after such
transaction; or (iii) the shareholders of the Company or the Guarantor approve
any plan of liquidation or dissolution of the Company or the Guarantor;
provided, however, that any internal reorganization of the Company and the
Guarantor into a single corporation will not constitute a Change of Control.
"Closing Price" when used with reference to the Common Stock, means the
last sale price, determined in the regular way, of the Common Stock on the day
in question or, if no sale price is quoted on that day, the closing bid price of
the Common Stock on that day, in each case as reported by NASDAQ or any national
securities exchange. In the event the Common Stock is not listed on a national
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securities exchange or on NASDAQ, the Closing Price shall be the last or closing
bid price quoted on the principal mechanism then used to report transactions in
the Common Stock.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, as created under the Exchange Act, or if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties on such date.
"Common Stock" means the Company's Common Stock, $.01 par value, and
shares of any class or classes resulting from any reclassification or
reclassifications thereof which have no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, and which are not subject to
redemption by the Company, and also shall include stock of the Company of any
other class, whether now or hereafter authorized which generally ranks, or is
entitled to a participation, as to assets or dividends, substantially on a
parity with such Common Stock or other class of stock into which such Common
Stock may have been changed; provided, however, that warrants or other rights to
purchase Common Stock will not be deemed to be Common Stock.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a corporation shall have become a successor
corporation pursuant to the applicable provisions of this Indenture, and
thereafter "Company" shall mean such successor corporation.
"Company Request" and "Company Order" mean, respectively, a written
request or order signed in the name of the Company by its Chairman of the Board,
President or a Vice President, and, by the Chief Financial Officer, Treasurer,
an Assistant Treasurer, Secretary, or an Assistant Secretary, and delivered to
the Trustee.
"Consolidated Coverage Ratio" means, for any Reference Period, the
ratio on a pro forma basis, according to GAAP, of (i) Consolidated EBITDA for
the Reference Period to (ii) Consolidated Interest Expense for such Reference
Period; provided, that, in calculating Consolidated EBITDA and Consolidated
Interest Expense (A) the incurrence of any Indebtedness (including the issuance
of the Notes) or issuance of any Disqualified Stock during the Reference Period
or subsequent to the Reference Period and on or prior to the date of the
transaction giving rise to the need to calculate the Consolidated Coverage Ratio
(the "Transaction Date") shall be assumed to have occurred on the first day of
such Reference Period, (B) the Consolidated Interest Expense attributable to
interest on any Indebtedness or dividends on any Disqualified Stock bearing a
floating interest (or dividend) rate shall be computed on a pro forma basis as
if the rate in effect on the Transaction Date were the average rate in effect
during the entire Reference Period, and (C) in determining the amount of
Indebtedness pursuant to the covenant captioned "Limitation of Incurrence of
Additional Indebtedness," the incurrence of Indebtedness or issuance of
Disqualified Capital Stock giving rise to the need to calculate the Consolidated
Coverage Ratio and, to the extent the net proceeds from the incurrence or
issuance thereof are used to retire Indebtedness, the application of the
proceeds therefrom shall be assumed to have occurred on the first day of the
Reference Period.
"Consolidated EBITDA" means the Consolidated Net Income of the Company
and the Guarantor and their Subsidiaries for the Reference Period, increased,
without duplication (to the extent deducted in determining Consolidated Net
Income), by the sum of: (i) all income taxes of the Company and the Guarantor
and their Subsidiaries paid or accrued for such period (other than income taxes
attributable to extraordinary gains or losses), (ii) all interest expense of the
Company and the Guarantor and their Subsidiaries paid or accrued for such period
(including amortization of original issue discount), (iii)
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depreciation and depletion of the Company and the Guarantor and their
Subsidiaries, (iv) amortization of the Company and the Guarantor and their
Subsidiaries, including, without limitation, amortization of capitalized debt
issuance costs and (v) any other non-cash charges to the extent deducted from
Consolidated Net Income, in each of the foregoing cases in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to the Company and
the Guarantor and their Subsidiaries, for the Reference Period, the aggregate
amount (without duplication) of (i) interest expensed in accordance with GAAP
(including, in accordance with the following sentence, interest attributable to
Capitalized Lease Obligations) during such period in respect of all Indebtedness
of the Company and the Guarantor and their Subsidiaries, including (A)
amortization of original issue discount on any Indebtedness, (B) the interest
portion of all deferred payment obligations, calculated in accordance with GAAP,
and (C) all commissions, discounts and other fees and charges owed with respect
to bankers' acceptance financing and currency and interest rate swap
arrangements, in each case to the extent attributable to such period), (ii)
capitalized interest to the extent not included in (i) above, and (iii)
dividend requirements of the Company and the Guarantor and their Subsidiaries
with respect to Disqualified Stock, whether in cash or otherwise (except
dividends paid solely in shares of Qualified Stock) paid (other than to the
Company or the Guarantor or any of their Subsidiaries), declared, accrued or
accumulated during such period, divided by the difference of one minus the
applicable actual combined federal, state, local and foreign income tax rate of
the Company and/or the Guarantor or any of their Subsidiaries (expressed as a
decimal), on a consolidated or combined basis, for the four quarters immediately
preceding the date of the transaction giving rise to the need to calculate
Consolidated Interest Expense, in each case to the extent attributable to such
period and excluding items eliminated in consolidation. For purposes of this
definition, (i) interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by the Company and the
Guarantor to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with GAAP and (ii) interest expense attributable to any
Indebtedness represented by the guarantee by the Company or the Guarantor, or a
Subsidiary of either of them of an obligation of another Person shall be deemed
to be the interest expense attributable to the Indebtedness guaranteed.
"Consolidated Net Income" of the Company means, for any period, the
aggregate net income (or loss) of the Company and the Guarantor and their
Subsidiaries for such period on a consolidated or combined basis, determined in
accordance with GAAP, provided that (i) the net income for such period of any
other Person that is not a Subsidiary of the Company, the Guarantor or their
Subsidiaries, or that is accounted for by the equity method of accounting shall
be included only to the extent of the amount of dividends, payments or
distributions actually paid to the Company or the Guarantor, or their
Subsidiaries, by such other Person in such period; and (ii) the net income for
such period of any Subsidiary of the Company or the Guarantor, that is subject
to any payment restriction will be included only to the extent of the amount of
dividends, payments or distributions which (A) are actually paid by such
Subsidiary in such period to the Company (or another Subsidiary which is not
subject to a payment restriction) and (B) are not in excess of the amount which
such Subsidiary would be permitted to pay to the Company or the Guarantor, (or
another Subsidiary which is not subject to a payment restriction) in any future
period under the payment restrictions applicable to such Subsidiary, assuming
that the net income of such Subsidiary in each future period is equal to the net
income for such Subsidiary for such period. "Net Income" of any Person for any
period shall mean the net income (loss) of such Person for such period,
determined in accordance with GAAP, less (i) for any period during which the
Company continues to be taxed as an S Corporation under the Code, any Permitted
Tax Contributions' (defined in Section 10.10 hereof) during such period with
respect to the taxable income of such period, (ii) the net income (or loss) of
any other Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition; (iii) any net gain or loss on the sale or
other disposition by the Company
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or the Guarantor or any of their Subsidiaries of assets not in the ordinary
course of business of the Company's or the Guarantor's operations and of the
Capital Stock of any Subsidiary of the Company; and (iv) extraordinary items.
"Consolidated Tangible Net Worth" means the total amounts shown on the
most recent quarterly balance sheet of the Company and the Guarantor, determined
on a consolidated or combined basis in accordance with GAAP, as (i) the equity
of the common stockholders plus the respective amounts reported on the Company's
and the Guarantor's most recent consolidated or combined balance sheets with
respect to any preferred stock (other than redeemable stock) then issued that by
its terms is not entitled to the payment of dividends unless such dividends may
be declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received upon
issuance of such preferred stock, less (ii) any write-ups (other than write-ups
of tangible assets of a going concern business made within twelve months after
the acquisition of such business) subsequent to the date of the Indenture in the
book value of any asset owned by the Company or the Guarantor or a consolidated
or combined subsidiary; provided, that Consolidated Tangible Net Worth shall not
reflect any gain or loss resulting from any asset disposition after the date of
the Indenture.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the date of the execution of this Indenture is located at
Corporate Trust Department A 000, 000 Xxxxx Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx,
Xxxxxxx 00000.
"Disinterested Director" means, with respect to an Affiliate
Transaction or series of related Affiliate Transactions, a member of the Board
of Directors of the Company who has no financial interest, and whose employer
has no financial interest, in such Affiliate Transaction or series of related
Affiliate Transactions.
"Disqualified Stock" means any Capital Stock of the Company or the
Guarantor or any Subsidiary of either of them which, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event or with the passage of time,
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 Maturity Date or which is exchangeable or convertible
into debt securities of the Company or the Guarantor or any Subsidiary of either
of them, except to the extent that such exchange or conversion rights cannot be
exercised prior to the Maturity Date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC thereunder.
"GAAP" means generally accepted accounting principles as in effect in
the United States of America as of the Issue Date.
"Group" means the definition of "Group" set forth in Section 13(d)(3)
of the Exchange Act.
"Guarantee" means the guarantee given by any Guarantor pursuant to
Article 13 hereof, including a notation on the Notes substantially in the form
attached hereto as Exhibit A-1.
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14
"Guarantor" means (i) Monterey Homes Corporation and (ii) any entity
that becomes a guarantor of the Notes in compliance with the provisions of
Article 13 hereof, including, but not limited to, any Subsidiary Guarantor.
"Holder" means a Person in whose name a Note is registered on the Note
Register.
"Indebtedness" means, without duplication, with respect to any Person,
(i) all obligations of such Person (A) in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such person or
only to a portion thereof), (B) evidenced by bonds, notes, debentures or similar
instruments, (C) representing the balance deferred and unpaid of the purchase
price of any property or services (other than accounts payable or other
obligations arising in the ordinary course of business), (D) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks, (E) for
the payment of money relating to a Capitalized Lease Obligation, or (F)
evidenced by a letter of credit or a reimbursement obligation of such Person
with respect to any letter of credit; (ii) all net obligations of such Person
under interest rate swap obligations and foreign currency xxxxxx; (iii) all
liabilities of others of the kind described in the preceding clauses (i) or (ii)
that such Person has guaranteed or that are otherwise its legal liability except
the Guarantee of a Guarantor hereunder; (iv) Indebtedness (as otherwise defined
in this definition) of another Person secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person, the amount
of such obligations being deemed to be the lesser of (1) the full amount of such
obligations so secured, and (2) the fair market value of such asset, as
determined in good faith by the Board of Directors of such Person, which
determination shall be evidenced by a Board Resolution; (v) with respect to such
Person, the liquidation preference or any mandatory redemption payment
obligations with respect to Disqualified Stock; and (vi) any and all deferrals,
renewals, extensions, refinancings and refundings (whether direct or indirect)
of, or amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clauses (i), (ii), (iii), (iv), (v), or this
clause (vi), whether or not between or among the same parties.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Investment" of any Person means (i) all investments by such Person in
any other Person in the form of loans, advances or capital contributions
(excluding advances to employees in the ordinary course of business), and (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 (including,
without limitation, purchases of assets outside the ordinary course of business)
or advances on a balance sheet of such Person prepared in accordance with GAAP.
"Insolvency or Liquidation Proceeding" means, with respect to any
Person, (i) an insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization proceeding or other similar case or proceeding,
relative to such Person or to its creditors, as such, or its assets, or (ii) any
liquidation, dissolution, reorganization proceeding or winding up of such Person
(other than any reincorporation of such Person in another jurisdiction), whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (iii) any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of such Person.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
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15
"Issue Date" means the date on which the Notes are originally issued
under the Indenture.
"Lien" means, with respect to any Person, any mortgage, pledge, lien,
encumbrance, easement, restriction, covenant, right-of-way, charge or adverse
claim affecting title or resulting in an encumbrance against real or personal
property of such Person, or a security interest of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, any option, right of first refusal or other similar agreement to sell,
in each case securing obligations of such Person, and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statute or statutes) of any jurisdiction).
"Maturity" or "Maturity Date" when used with respect to the Notes,
means the date on which the principal of such Notes become due and payable as
therein or herein provided, whether at the Stated Maturity or by declaration of
acceleration or otherwise.
"Net Available Proceeds" means, with respect to any Asset Sale of any
Person, cash proceeds received (including any cash proceeds received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise, but only as and when received, and excluding any other consideration
until such time as such 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 or local taxes required to be
accrued as a liability as a consequence of such Asset Sale, and in each case net
of all Indebtedness which was secured by such assets, in accordance with the
terms of any Lien upon or with respect to such assets, or which must, by its
terms or in order to obtain a necessary consent to such Asset Sale or by
applicable law, be repaid out of the proceeds from such Asset Sale and which is
actually so repaid.
"Net Cash Proceeds" means, in the case of any sale by the Company or
the Guarantor of securities pursuant to the covenant captioned "Limitation on
Restricted Payments," the aggregate net cash proceeds received by the Company or
the Guarantor, after payment of expenses, commissions, discounts and any other
transaction costs incurred in connection therewith.
"Notes" means $8,000,000 principal amount of 13.0% Senior Subordinated
Notes Due 2001.
"Offering" means the private offering of the Notes.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Chief Financial
Officer, Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, acceptable to
the Trustee, who may (except as otherwise expressly provided in this Indenture)
be counsel for the Company.
"Outstanding" when used with respect to the Notes means, as of the date
of determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) Notes theretofore cancelled and delivered to the Trustee
or delivered to the Trustee for cancellation;
(ii) Notes for whose payment in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent (other than
the Company) in trust or set aside and
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16
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Notes; and
(iii) Notes in exchange for or in lieu of which other Notes
have been authenticated and delivered Pursuant to this Indenture;
provided, however, that in determining whether the Holders of the requisite
principal amount of Notes Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes which the Trustee actually knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor upon the Notes or any Affiliate
of the Company or such other obligor.
"Paying Agent" means Bank One, Arizona, NA, or any Person authorized
by the Company pursuant to this Indenture to pay the principal of (and premium,
if any) or interest on any Notes on behalf of the Company. For as long as Bank
One, Arizona, NA, is the Paying Agent, there shall be no Co-Paying Agent
appointed without the consent of Bank One, Arizona, NA.
"Permitted Business Investments" means (i) Investments by the Company
or the Guarantor or any other Wholly Owned Subsidiary in a Person which
immediately prior to the making of such Investment is a Wholly-Owned Subsidiary;
(ii) Investments in the Company by any Wholly Owned Subsidiary; and (iii)
Investments by the Company or the Guarantor or a Subsidiary of the Company or
the Guarantor in a Person if as a result of such Investment such Person becomes
a Subsidiary of the Company, the Guarantor or a Subsidiary of either; provided
further, that if such Person does not become a Subsidiary of the Company, the
Guarantor or a Subsidiary of either, it must nonetheless be engaged in an
activity or business which would be considered to be the Principal Business of
the Company or the Guarantor.
"Permitted Company Refinancing Indebtedness" means Indebtedness of the
Company, the net proceeds of which are used to renew, extend, refinance, refund
or repurchase outstanding Indebtedness of the Company existing at the date of
the Indenture or other Indebtedness permitted under the Indenture, provided that
(i) if the Indebtedness (including the Notes) being renewed, extended,
refinanced, refunded or repurchased is subordinated in right of payment to the
Notes, then such Indebtedness is subordinated in right of payment to, as the
case may be, the Notes, at least to the same extent as the Indebtedness being
renewed, extended, refinanced, refunded or repurchased, (ii) such Indebtedness
is scheduled to mature either after the Maturity Date or no earlier than the
Indebtedness being renewed, extended, refinanced, refunded or repurchased, and
(iii) such Indebtedness has an Average Life at the time such Indebtedness is
incurred that is equal to or greater than the remaining Average Life of the
Indebtedness being renewed, extended, refinanced, refunded or repurchased;
provided, further, that such Indebtedness (to the extent that such Indebtedness
constitutes Permitted Company Refinancing Indebtedness) is in an aggregate
principal amount not in excess of the amount (or, if such Indebtedness is issued
at a price less than the principal amount thereof, the aggregate amount of gross
proceeds therefrom is not in excess of the aggregate principal amount) then
outstanding of the Indebtedness being renewed, extended, refinanced, refunded or
repurchased (or if the Indebtedness being renewed, extended, refinanced,
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17
refunded or repurchased was issued at a price less than the principal amount
thereof, then not in excess of the amount of liability in respect thereof
determined in accordance with GAAP).
"Permitted Financial Investments" means the following kinds of
instruments if, in the case of instruments referred to in clauses (i)-(iv)
below, on the date of purchase or other acquisition of any such instrument by
the Company or the Guarantor or any Subsidiary of either of them, the remaining
term to maturity is not more than one year: (i) readily marketable obligations
issued or unconditionally guaranteed as to principal and interest by the United
States of America or by any agency or authority controlled or supervised by and
acting as an instrumentality of the United States of America; (ii) repurchase
obligations for instruments of the type described in clause (i) for which
delivery of the instrument is made against payment; (iii) obligations
(including, but not limited to, demand or time deposits, bankers' acceptances
and certificates of deposit) issued by a depository institution or trust company
incorporated or doing business under the laws of the United States of America,
any state thereof or the District of Columbia or a branch or subsidiary of any
such depository institution or trust company operating outside the United
States, provided, that such depository institution or trust company has, at the
time of the Company's or the Guarantor's or any of their Subsidiary's investment
therein or contractual commitment providing for such investment, capital,
surplus or undivided profits (as of the date of such institution's most recently
published financial statements), in excess of $100,000,000; (iv) commercial
paper issued by any corporation, if such commercial paper has, at the time of
the Company's or the Guarantor's or any of their Subsidiary's investment therein
or contractual commitment providing for such investment, credit ratings of A-1
by Standard & Poor's Corporation and P-1 by Xxxxx'x Investors Service, Inc.; and
(v) money market mutual or similar funds having assets in excess of
$100,000,000.
"Permitted Investments" means Permitted Business Investments and
Permitted Financial Investments.
"Permitted Liens" means (i) Liens existing on the Issue Date; (ii)
Liens now or hereafter securing Senior Indebtedness; (iii) Liens now or
hereafter securing any interest rate hedging obligations (A) that the Company or
the Guarantor is required to enter into with respect to a Bank Credit Facility
or (B) that are entered into for the purpose of managing interest rate risk with
respect to Indebtedness of the Company and the Guarantor and their Subsidiaries,
provided that such interest rate obligations under clauses (A) and (B) do not
have an aggregate notional amount which exceeds the aggregate principal amount
of Indebtedness of the Company and the Guarantor and their Subsidiaries; (iv)
Liens securing Permitted Company Refinancing Indebtedness, the proceeds of which
are used to refinance secured Indebtedness of the Company or the Guarantor or
their Subsidiaries; provided, that such Liens extend to or cover only the
property or assets currently securing the Indebtedness being refinanced or
additional property or assets provided there is no breach of the covenants
regarding additional Indebtedness caused thereby; (v) Liens for taxes,
assessments and governmental charges not yet delinquent or being contested in
good faith and for which adequate reserves have been established to the extent
required by GAAP, (vi) mechanics', workmen's materialmen's, operator's or
similar Liens arising in the ordinary course of business, (vii) Liens in
connection with workmen's compensation, unemployment insurance or other social
security, old age pension or public liability obligations, (viii) Liens,
deposits or pledges to secure the performance of bids, tenders, contracts (other
than contracts for the payment of money), leases, public or statutory
obligations, surety, stay, appeal, indemnity, performance or other similar
bonds, or other similar obligations arising in the ordinary course of business;
(ix) survey exceptions, encumbrances, easements or reservations of, or rights of
others for, rights or way, zoning or other restrictions as to the use of real
properties, and minor defects in title which, in the case of any of the
foregoing, were not incurred or created to secure the payment of borrowed money
or the deferred purchase price of property
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18
or services, and in the aggregate do not materially adversely affect the value
of such properties or materially impair the use or the purposes for which such
properties are held by the Company or any Subsidiaries, (x) judgment and
attachment Liens not giving rise, or that would not give rise, to an Event of
Default or Liens created by or existing from any litigation or legal proceeding
that are currently being contested in good faith by appropriate proceedings and
for which adequate reserves have been made, (xi) (A) Liens upon any property of
any Person existing at the time of acquisition thereof by the Company or a
Subsidiary, (B) Liens upon any property of a Person existing at the time such
Person is merged or consolidated with the Company or any Subsidiary or existing
at the time of the sale or transfer of any such property of such Person to the
Company or any Subsidiary, or (C) Liens upon any property of a Person existing
at the time such Person becomes a Subsidiary; provided, that in each case such
Lien has not been created in contemplation of such sale, merger, consolidation,
transfer or acquisition, and provided further that in each such case no such
Lien shall extend to or cover any property of the Company or any Subsidiary
other than the property being acquired and improvements thereon, (xii) Liens on
deposits to secure public or statutory obligations or in lieu or surety or
appeal bonds entered into in the ordinary course of business, (xiii) Liens in
favor of collecting or payor banks having a right of setoff, revocation, refund
or chargeback with respect to money or instruments of the Company or any
Subsidiary on deposit with or in possession of such bank, and (xiv) purchase
money security interests granted in connection with the acquisition of fixed
assets in the ordinary course of business and consistent with past practices,
provided, that (A) such Liens attach only to the property so acquired with the
purchase money indebtedness secured thereby and (B) such Liens secure only
Indebtedness that is not in excess of 100% of the purchase price of such fixed
assets.
"Permitted Subsidiary Refinancing Indebtedness" means Indebtedness of
any Subsidiary, the net proceeds of which are used to renew, extend, refinance,
refund or repurchase outstanding Indebtedness of such Subsidiary, provided that
(i) if the Indebtedness (including any guarantee thereof) being renewed,
extended, refinanced, refunded or repurchased is pari passu with or subordinated
in right of payment to the Guarantee, then such Indebtedness is pari passu with
or subordinated in right of payment to, as the case may be, the Guarantee at
least to the same extent as the Indebtedness being renewed, extended,
refinanced, refunded or repurchased, (ii) such Indebtedness is scheduled to
mature either after the Maturity Date or no earlier than the Indebtedness being
renewed, extended, refinanced, refunded or repurchased, and (iii) such
Indebtedness, has an Average Life at the time such Indebtedness is incurred that
is equal to or greater than the remaining Average Life of the Indebtedness being
renewed, extended, refinanced, refunded or repurchased; provided further, that
such Indebtedness (to the extent that such Indebtedness constitutes Permitted
Subsidiary Refinancing Indebtedness) is in an aggregate principal amount (or, if
such Indebtedness is issued at a price less than the principal amount thereof,
the aggregate amount of gross proceeds therefrom is) not in excess of the
aggregate principal amount then outstanding under the Indebtedness being
renewed, extended, refinanced, refunded or repurchased (or if the Indebtedness
being renewed, extended, refinanced, refunded or repurchased was issued at a
price less than the principal amount thereof, then not in excess of the amount
of liability in respect thereof determined in accordance with GAAP).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency, political subdivision or instrumentality thereof.
"Placement Agent" means Xxxxxxxx, Billings, Xxxxxx & Co., Inc., located
at 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, or such other
address as indicated in the notice to the Company or the Trustee given by the
Placement Agent in accordance with the provisions of this Indenture.
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"Post-Commencement Interest" means all interest accrued or accruing
after the commencement of any Insolvency or Liquidation Proceeding in accordance
with and at the contract rate (including, without limitation, any rate
applicable upon default) specified in the agreement or instrument creating,
evidencing, or governing any Senior Indebtedness, whether or not, pursuant to
applicable law or otherwise, the claim for such interest is allowed as a claim
in such Insolvency or Liquidation Proceeding.
"Principal Business" means any business related, directly or
indirectly, to providing mortgage services, building, financing and selling of
homes, including all subcontracting trades, suppliers, financing and servicing
of debt and acquisition of real property which is intended substantially for
residential development within a multi-use development.
"Qualified Stock" means any Capital Stock that is not Disqualified
Stock.
"Reference Period" means, with respect to any Person, the four (4) full
fiscal quarters ended immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Notes or the Indenture.
"Representative" means the indenture trustee or other trustee, agent or
representative of holders of any Senior Indebtedness.
"Responsible Officer" when used with respect to the Trustee means the
chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of any executive committee of the board of directors, the
president, any vice president (whether or not designated by a number or a word
or words added before or after the title "vice president"), the secretary, any
assistant secretary, the chief financial officer, treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller or any assistant controller or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Payments" means, with respect to any Person, any of the
following: (i) any dividend or other distribution in respect of such Person's
Capital Stock (other than (A) dividends or distributions payable solely in
Capital Stock (other than Disqualified Stock) and (B) in the case of
Subsidiaries of the Company or the Guarantor, dividends or distributions payable
to the Company or the Guarantor or to a Subsidiary of the Company or the
Guarantor); (ii) the purchase, redemption or other acquisition or retirement for
value of any option, warrant, or other right to acquire shares of Capital Stock,
of the Company or the Guarantor or any of their Subsidiaries; (iii) the making
of any principal payment on, or the purchase, defeasance, repurchase, redemption
or other acquisition or retirement for value, prior to any scheduled maturity,
scheduled repayment or scheduled sinking fund payment, of any Indebtedness which
is subordinated in right of payment to the Notes and (iv) the making by such
Person of any Investment other than a Permitted Investment.
"Senior Indebtedness" means any Indebtedness of the Company (whether
outstanding on the date hereof or hereafter incurred), unless such Indebtedness
is pari passu with or contractually subordinate or junior in right of payment to
the Notes, except Indebtedness to any Affiliate of the Company and the Guarantor
which shall be junior and subordinate to the Notes, and except Indebtedness
evidenced by any series of Notes authorized to be issued hereunder in addition
to and on parity with the Notes.
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20
"Stated Maturity" when used with respect to any Note or any installment
of interest thereon means the date specified in such Note as the fixed date on
which the principal of such Note or such installment of interest is due and
payable.
"Subordinated Indebtedness of the Company" means any Indebtedness of
the Company (whether outstanding on the date hereof or hereafter incurred) which
is contractually subordinate or junior in right of payment to the Notes and
which has a scheduled payment date which is after the Maturity Date.
"Subsidiary" means any subsidiary of the Company or, as the context
indicates, any subsidiary of the Guarantor. A "subsidiary" of any Person means
(i) a corporation a majority of whose Voting Stock is at the time, directly or
indirectly, owned by such person, by one or more subsidiaries of such Person or
by such Person and one or more subsidiaries of such Person, (ii) a partnership
in which such Person or a subsidiary of such Person is, at the date of
determination, a general or limited partner of such partnership, but only if
such person or its subsidiary is entitled to receive more than fifty percent of
the assets of such partnership upon its dissolution, or (iii) any other Person
(other than a corporation or partnership) in which such Person, directly or
indirectly, at the date of determination thereof, has (x) at least a majority
ownership interest or (y) the power to elect or direct the election of a
majority of directors or other governing body of such Person.
"Subsidiary Guarantor" means (i) each of the Company's material
Subsidiaries that becomes a guarantor of the Notes in compliance with the
provisions of Article 13 hereof; and (ii) each of the material Subsidiaries
executing a supplemental indenture in which Subsidiary agrees to be bound by the
terms of this Indenture.
"Trading Day" means a day on which a quote for the Common Stock is
published on the principal exchange or other market mechanism used to report
transactions in or prices of the Common Stock.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
(15 U.S. Code Sections 77aaa and 77bbbb) as in effect on the date of this
Indenture and as thereafter amended from time to time, except as provided in
Section 9.5.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America and payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) are not callable or redeemable at the option of the issuer
thereof.
"U.S. Legal Tender" means such coin or currency of the United States as
at the time of payment shall be legal tender for the payment of public and
private debts.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class
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21
of stock has voting power by reason of any contingency) to vote in the election
of members of the Board of Directors or other governing body of such Person.
"Wholly Owned Subsidiary" means a Subsidiary, all the Capital Stock
(other than directors, qualifying shares, if applicable) of which is owned by
the Company or the Guarantor or another Wholly Owned Subsidiary.
SECTION 1.2. COMPLIANCE CERTIFICATE AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.3. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any certificate or Opinion of Counsel may be based to such counsel's
best knowledge, based upon a certificate or opinion of or representations by,
an officer or officers of the Company, stating that the information contained in
such certificate or opinion of, or representations by an officer or officers of
the Company is in the
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possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1 hereof) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.
(b) Proof of the fact and date of the execution by any Person of any
such instrument or writing shall be sufficient for any purposes of this
Indenture if made in accordance with such reasonable rules and regulations as
may be prescribed by the Trustee or in such manner as shall be satisfactory to
the Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind every future Holder
of the same Note and the Holder of every Note issued upon the transfer thereof
or in exchange therefor or in lieu thereof, in respect of anything done or
suffered to be done by the Trustee or the Company in reliance thereon, whether
or not notation of such action is made upon such Note.
SECTION 1.5. NOTICES, ETC. TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
the Trustee at its Corporate Trust Office,
(2) the Company by the Trustee or by any, Holder shall be sufficient
for every purpose hereunder if in writing and mailed. first-class postage
prepaid, to the Company addressed to it at the address of its principal office
specified in the first paragraph of this Indenture or at any other address
previously furnished in writing to the Trustee by the Company, or
(3) any Subsidiary Guarantor or the Guarantor by the Trustee or by any
Holder shall be sufficient for every purpose hereunder if in writing and mailed,
first-class postage prepaid, to the
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Guarantor addressed to it at the address of its principal office specified in
the first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Guarantor, and with respect to any
Subsidiary Guarantor, addressed in care of Guarantor.
SECTION 1.6. NOTICES TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders, such notice shall
be sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Holder of such Notes, at his
address as it appears on the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice,
with a copy thereof to the Trustee. Where this Indenture provides for notice in
any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders, and any notice which
is mailed in the manner herein provided shall be conclusively presumed to have
been duly given.
SECTION 1.7. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with another
provision which is required to be included in this Indenture by any of the
provisions of the TIA, such required provision shall control.
SECTION 1.8. EFFECT OF HEADINGS AND TABLES OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.9. SUCCESSORS AND ASSIGNS.
All covenants and agreements by the Company and the Guarantor in this
Indenture shall bind their respective successors and assigns, whether so
expressed or not.
SECTION 1.10. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality or enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders of Notes, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
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SECTION 1.12. GOVERNING LAW.
This Indenture shall be construed in accordance with and governed by
the laws of the State of Arizona applicable to contracts made and to be
performed entirely in that state.
ARTICLE 2
NOTE FORM
SECTION 2.1. FORM GENERALLY.
The Notes, which shall be registered Notes without coupons, and the
Trustee's certificate of authentication shall be in substantially the forms set
forth in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon, as may be required to comply
with the rules of any securities exchange, or as may, consistently herewith, be
determined by the officers executing such Notes, as evidenced by their signing
of the Notes.
The definitive Notes shall be printed, lithographed, engraved or
produced by any combination of these methods on steel engraved borders or may be
produced in any other manner permitted by the rules of any securities exchange,
all as determined by the officers executing such Notes, as evidenced by their
signing of such Notes.
SECTION 2.2. FORM OF FACE OF NOTE.
MONTEREY MANAGEMENT, INC.
13.0% SENIOR SUBORDINATED NOTE
DUE 2001
$_______________ No.__________
MONTEREY MANAGEMENT, INC., a corporation duly organized and existing
under the laws of the State of Arizona (herein called the "Company," which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to _____________________________, or
registered assigns. the principal sum of______________________________________
DOLLARS on October 15, 2001, and to pay interest thereon from the later of the
date on which this Note is first issued (the "Date of Issue") or the most recent
Interest Payment Date to which interest has been paid or duly provided for, as
the case may be, semiannually on October 15 and April 15 in each year,
commencing April 15, 1995, at the rate of 13.0% per annum, until the principal
hereof is paid or duly provided for. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, subject to certain
exceptions as provided in the Indenture hereinafter referred to, be paid to the
person in whose name this Note is registered at the close of business on October
1 or April 1 (or if such day is not a Business Day then at the close of business
on the Business Day next preceding such day) next preceding such Interest
Payment Date. Interest so payable will be calculated on the basis of a 360-day
year of twelve 30-day months. Payments of the principal of (and premium, if any)
and interest on this Note will be made at the office or agency of the Company
maintained for that purpose in Phoenix,
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Arizona, or in such other office or agency as may be established by the Company
pursuant to said Indenture, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made (subject to collection) by check mailed to the address of
the person entitled thereto as such address shall appear on the Note Register.
Reference is hereby made to the further provisions of this Note set
forth on the reverse side hereof which further provisions shall for all purposes
have the same effect as though fully set forth at this place.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereof shall have been manually signed by the
Trustee under the Indenture.
IN WITNESS WHEREOF, MONTEREY MANAGEMENT, INC. has caused this Note to
be signed in its name by the manual or facsimile signature of its President and
attested by the manual or facsimile signature of its Secretary.
Dated:_____________________________
MONTEREY MANAGEMENT, INC.
By:_______________________________
ITS PRESIDENT
ATTEST:
___________________________________
SECRETARY
SECTION 2.3. AUTHENTICATION.
The Trustee, upon the execution and delivery of this Indenture, the
execution and delivery to it by the Company of the Notes, as hereinabove
provided, shall from time to time authenticate Notes as necessary to issue the
Notes or reissue upon a transfer by the registered holder thereof.
SECTION 2.4. FORM OF REVERSE OF NOTE.
MONTEREY MANAGEMENT, INC.
13.0% SENIOR SUBORDINATED NOTE
DUE 2001
This Note is one of a duly authorized issue of the Notes of the Company
designated as its 13.0% Senior Subordinated Note Due 2001 (herein called the
"Notes"), limited in aggregate principal amount to $8,000,000 issued and to be
issued under an Indenture dated as of October 17, 1994 (hereinafter called the
"Indenture"), by and among the Company, Monterey Homes Corporation, as guarantor
("Guarantor")
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and Bank One, Arizona, NA, as Trustee (herein called the "Trustee," which term
includes any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights thereunder of the Company, the Guarantor, the Trustee and the
Holders of the Notes, and the terms upon which the Notes are, and are to be,
authenticated and delivered.
The Indenture permits, with certain exceptions, as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company, the Guarantor, and the rights of the Holders of the Notes under the
Indenture at any time by the Company and the Guarantor, with the consent of the
Holders of a majority in aggregate principal amount of the Notes at the time
Outstanding, as defined in the Indenture. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the Notes
at the time Outstanding, as defined in the Indenture, on behalf of the Holders
of all the Notes, to waive compliance by the Company or the Guarantor with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. The Indenture also contains provisions with
certain exceptions, as therein provided, which permit the amendment thereof in
order to correct certain matters without the consent of the Holders. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration or transfer hereof or in exchange therefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Note.
No reference herein to the Indenture and no provisions of this Note or
of the Indenture shall alter or impair the obligation of the Company or the
Guarantor, which is absolute and unconditional, to pay the principal of (and
premium if any) and interest on this Note at the times, places and rate, and in
the coin and currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, this Note is transferable on the Note Register of the Company, upon
surrender of this Note for registration of transfer at the office or agency of
the Company to be maintained for that purpose in Phoenix, Arizona, or at such
other office or agency as may be established by the Company for such purpose
pursuant to the Indenture, duly endorsed by, or accompanied by written
instrument of transfer in form satisfactory to the Company and the Note
Registrar duly executed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees. The Company has appointed the Trustee as the Note
Registrar and Paying Agent for the Notes.
The Notes may be redeemed at the option of the Company, in whole or in
part (in any integral multiple of $1,000), at any time on or after October 15,
1998, on not less than 30 days, nor more than 60 days, notice mailed to the
registered Holders thereof at their last registered addresses, at the following
redemption prices (expressed as percentages of the principal amount), together
with accrued and unpaid interest to and including the date fixed for redemption,
if redeemed during the 12-month period beginning October 15 of the following
years:
Years Redemption Price
1998 106.500%
1999 103.250%
2000 and thereafter 100.0%
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In addition, the Notes may be redeemed at the option of the Company
upon completion by the Company of an initial public offering in excess of $10.0
million at a purchase price equal to 100% of the principal amount to be
redeemed, plus the interest rate the Notes then bear, together with accrued and
unpaid interest to and including the dated fixed for redemption upon notice as
set forth in the Indenture; provided, however, the Company cannot redeem Notes
aggregating more than 25% of the outstanding principal balance of the Notes
pursuant to the provisions hereof.
In addition, in the event that the Company's and Guarantor's
Consolidated Tangible Net Worth at the end of each of any two consecutive fiscal
quarters is less than $2,000,000, the annual rate of interest on the Notes shall
be increased by one percent (1%) from the annual rate of interest the Notes then
bear, which adjusted rate of interest shall remain in effect from the deficiency
date until the end of the fiscal quarter in which the Company's and the
Guarantor's Consolidated Tangible Net Worth is equal to or exceeds $2,000,000.
In the event that the Company's and the Guarantor's Consolidated Tangible Net
Worth at the end of each of two consecutive fiscal quarters is less than
$1,500,000, the annual rate of interest on the Notes shall be increased by four
percent (4%) from the annual rate of interest the Notes then bear unless the
annual interest rate has already been and remains increased by one percent (1%)
in accordance with the immediately preceding sentence, in which case the annual
rate of interest shall be increased by three percent (3%) from the annual rate
of interest the Notes then bear, such adjusted rate of interest in either
situation remaining in effect from the Deficiency Date until the end of the
fiscal quarter in which the Company's and the Guarantor's Consolidated Tangible
Net Worth exceeds $1,500,000.
If fewer than all of the Notes are to be redeemed, the Trustee shall
select the particular Notes (or the portions thereof) to be redeemed either by
lot, pro rata or by such other method as the Trustee shall deem fair and
appropriate, but in any such event, in such manner as complies with applicable
legal requirements; provided, however, that the principal portion redeemed shall
not be less than the smallest authorized denomination of the Notes. On or after
the redemption date, interest will cease to accrue on Notes or portions thereof
called for redemption.
If the Company fails to maintain its and the Guarantor's Consolidated
Tangible Net Worth, as described in Section 10.17 of the Indenture, then the
Company shall offer to purchase Notes in an aggregate principal amount equal to
10% of the principal amount of the Notes, at the time such offer is made, at a
purchase price equal to 100% of the aggregate principal amount of such Note,
plus accrued and unpaid interest to the date of purchase. In no event shall the
Company's failure to meet the Minimum Consolidated Tangible Net Worth at the end
of any fiscal quarter cause the making of more than one offer to purchase
Notes. Upon a Change of Control (as defined in Section 1.1 of the Indenture),
the Company, as described in Section 10.16 of the Indenture, will be required
to offer to purchase all of the Notes at 101% of the principal amount thereof,
plus accrued interest, if any, to the date of purchase. In addition, in the
event that the Company sells assets, under certain circumstances, as described
in Section 10.11 of the Indenture, the Company will be required to make an
offer to purchase a certain principal amount of the Notes, on a pro rata basis
of all Notes tendered, at 100% of the principal amount thereof, plus accrued
interest, if any, to the date of purchase.
If an Event of Default as defined in the Indenture shall occur and be
continuing, the principal of all or a portion of the Notes may become or be
declared due and payable in the manner and with the effect provided in the
Indenture. If an Event of Default on the Notes shall occur, the rate of interest
shall be the rate set forth on the face of this Note, plus 4% per annum, which
amount shall accrue on the indebtedness evidenced by the Notes from such date
for such period of time until the default is cured.
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The Notes are issuable only in registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000, as provided in the
Indenture and subject to certain limitations therein set forth. Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such transfer or exchange, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee, nor any such agent shall be affected by notice to the contrary.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to:
_______________________________________________________________________________
(Insert assignee's social security or tax identification no.)
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _____________________________________ as agent to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.
Date:___________________ Your Signature:_______________________________
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee:____________________________________________________
By_______________________________________
The signature should be guaranteed by an eligible
guarantor institution (a bank, stockbroker, savings
and loan association of credit union with membership
in an approved signature guarantee medallion
program) pursuant to Rule 17Ad-15 of the Securities
Exchange Act of 1934.
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FORM OF OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 10.11, 10.16 or Section 10.17 of the Indenture, check the
appropriate box:
Section 10.11 [ ] Section 10.16 [ ] Section 10.17 [ ]
If you want to have only part of this Note purchased by the Company
pursuant to Section 10.11, Section 10.16 or Section 10.17 of the Indenture,
state the amount (in integral multiples of $1,000):
$______________________
Date:___________________________ Your Signature:___________________________
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:________________________________________________________
By______________________________________
The signature should be guaranteed by an
eligible guarantor institution (a bank,
stockbroker, savings and loan association or
credit union with membership in an
approved signature guarantee medallion
program) pursuant to Rule 17Ad-15 of the
Securities Exchange Act of 1934.
Section 2.5. Form of Trustee's Certificate of Authentication.
This is one of the Notes referred to in the within mentioned Indenture.
BANK ONE, ARIZONA, NA, as Trustee
By:_____________________________
AUTHORIZED REPRESENTATIVE
ARTICLE 3
THE NOTES
SECTION 3.1. TITLE AND TERMS.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $8,000,000, except for Notes
authenticated and delivered upon transfer of, or in exchange for, or in lieu of
other Notes pursuant to Sections 3.4, 3.5, 3.6, 9.6 and 12.2. The Notes issued
hereunder shall consist of $8,000,000 of 13.0% Senior Subordinated Notes Due
2001. Forthwith upon the execution and delivery of this Indenture, or from time
to time thereafter, Notes up to a maximum aggregate principal amount of
$8,000,000 may be executed by the Company and delivered to the Trustee for
authentication, and shall thereupon be authenticated and delivered by the
Trustee upon Company order, without any further action by the Company.
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The Notes shall be known and designated as the "13.0% Senior
Subordinated Notes Due 2001" of the Company. Their Stated Maturity shall be
October 15, 2001 and they shall bear interest at the rate of 13.0% per annum
from their Date of Issue or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, as the case may be, payable
semiannually on October 15 and April 15, commencing April 15, 1995, until the
principal thereof is paid or duly provided for. The Notes are subject to
redemption by the Company prior to maturity as set forth in Article 12 and are
subject to tender for purchase as provided in Sections 10.11, 10.16 and 10.17
hereof. The Holder of any Note at the close of business on any Record Date
(as hereinafter defined) with respect to any Interest Payment Date shall be
entitled to receive the interest payable thereon on such Interest Payment Date
notwithstanding the cancellation of such Note upon any transfer or exchange
thereof subsequent to such record date and prior to such Interest Payment Date,
unless there be a default in payment of interest by the Company in which case
such defaulted interest shall be paid to the Person in whose name such Note is
registered (a) on the date of payment of such defaulted interest or (b) at the
election of the Company, on a special record date ("Special Record Date"), which
shall be not less than five Business Days preceding the date of payment of such
defaulted interest, established for such purpose by notice given by or on behalf
of the Company to the Holders not less than ten Business Days preceding the date
so established. The term "Record Date" as used herein with respect to any
Interest Payment Date (other than any date on which defaulted interest is paid)
shall mean the September 1 or March 1 (or if that day is not a Business Day, the
next preceding Business Day) next preceding such Interest Payment Date.
The principal of (and premium, if any) and interest on the Notes shall
be payable at the office or agency of the Paying Agent in Phoenix, Arizona;
provided, however, that interest may be payable at the option of the Paying
Agent by check mailed to the address of the person entitled thereto as such
address shall appear on the Note Register.
The Notes shall be subordinated in right of payment to Senior
Indebtedness of the Company as provided in Article 11.
The Notes shall be senior in right of payment to all Subordinated
Indebtedness of the Company.
SECTION 3.2. DENOMINATIONS.
The Notes may be issued in denominations of $1,000 and any integral
multiple thereof.
SECTION 3.3. EXECUTION, AUTHENTICATION AND DELIVERY.
The Notes shall be executed on behalf of the Company by its President
or one of its Vice Presidents under its corporate seal reproduced thereon and
attested by its Secretary or one of its Assistant Secretaries. The President of
the Guarantor shall sign the Guarantee of the Guarantor on behalf of the
Guarantor. The signature of any of these officers on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company or a Subsidiary Guarantor,
as the case may be, shall bind the Company and such Subsidiary Guarantor,
respectively, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the authentication and delivery of such Notes or
did not hold such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Notes executed by the Company to the
Trustee, together with a Company Order
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for the authentication and delivery of such Notes; and the Trustee in accordance
with such Order shall authenticate and deliver such Notes as in this Indenture
provided and not otherwise.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
representatives, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 3.4. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Notes which are printed, lithographed, typewritten, mimeographed or otherwise
produced in any denomination, substantially of the tenor of the definitive Notes
in lieu of which they are issued, with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as evidenced by their signing of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Trustee in
Phoenix, Arizona, without charge or any other cost to the Holder. Upon surrender
for cancellation of any one or more temporary Notes the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Notes of authorized denominations. Until so
exchanged the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes.
SECTION 3.5. REGISTRATION, TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (herein sometimes referred to as the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of and registration of transfers of Notes as
herein provided. The Trustee is hereby appointed the Note Registrar and Paying
Agent for the purpose of registering Notes and transfers of Notes as herein
provided and for the purpose of paying the principal of and interest and any
other amount due on the Notes. The Company agrees to pay the Trustee's then
customary fees for services rendered in connection with the registration of
transfers or exchanges of the Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Trustee in Phoenix, Arizona, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more of new Notes of a like aggregate principal amount,
all as requested by the transferor.
At the option of the Holder, Notes may be exchanged for other Notes of
any authorized denominations, of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency, and upon
payment of any tax or governmental charge payable in connection therewith, if
the Company shall so require. Whenever any Notes are so surrendered for
exchange, the Company
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shall execute, and the Trustee shall authenticate and deliver, the Notes which
the Holder making the exchange is entitled to receive.
All Notes surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly cancelled by the Trustee and thereafter
disposed of as directed by a Company Order.
All Notes issued in exchange for or upon transfer of Notes shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Notes surrendered for such exchange
or transfer.
Every Note presented or surrendered for transfer or exchange shall (if
so required by the Company or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Note Registrar duly executed, by the Holder thereof or his attorney duly
authorized in writing.
The Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any transfer or
exchange of Notes, other than exchanges expressly provided for in this Indenture
to be made at the Company's own expense, or without expense or without charge to
Holders.
Until a registration statement for the Notes shall have been declared
effective by the Commission under the Securities Act of 1933, as amended, each
Note shall bear a legend substantially in the form attached hereto as Exhibit A.
SECTION 3.6. MUTILATED, DESTROYED, LOST OR STOLEN NOTES.
A mutilated Note may be surrendered and thereupon the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Note of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there be delivered to the Company and to the Trustee
(i) evidence to their satisfaction of the destruction, loss or theft of
any Note, and
(ii) such security or indemnity as may be required by them to save each
of them harmless,
then, in the absence of notice to the Company or the Trustee that such Note has
been acquired by a bona fide purchaser, the Company shall execute and upon its
request the Trustee shall authenticate and deliver in lieu of any such
destroyed, lost or stolen Note, a new Note of like tenor and principal amount
and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
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Every new Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 3.7. PERSONS DEEMED OWNERS.
Subject to the express provisions of Section 3.11 of this Indenture,
the Company, the Trustee and any agent of the Company may treat the Person in
whose name any Note is registered as the owner of such Note for the purpose of
receiving payment of principal of (and premium, if any) and interest on such
Note and for all other purposes whatsoever whether or not such Note be overdue,
and neither the Company, the Trustee nor any agent of the Company shall be
affected by notice to the contrary.
SECTION 3.8. CANCELLATION.
All Notes surrendered for payment, registration of transfer or exchange
shall, if surrendered to the Company or any agent of the Company be delivered
to the Trustee and, if not already cancelled, shall be promptly cancelled by it.
The Company may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Notes held by the Trustee
shall be disposed of as directed by a Company Order.
SECTION 3.9. AUTHENTICATION AND DELIVERY OF NOTES.
Forthwith upon the execution and delivery of this Indenture, or from
time to time thereafter, the Notes may be executed by the Company and delivered
to the Trustee for authentication, and shall thereupon be authenticated and
delivered by the Trustee upon Company Order, without any further action by the
Company.
SECTION 3.10. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require the Paying Agent to hold in trust for the
benefit of Holders all money held by such Paying Agent for the payment of
principal of, premium, if any, or interest on the Notes (whether such money
shall have been paid to it by the Company or any Guarantor), and to notify the
Trustee of any Default by the Company or any Guarantor in making any such
payment. While any such Default continues, the Trustee may require the Paying
Agent to pay all money held by it to the Trustee. Except as provided in the
immediately preceding sentence, the Company at any time may require a Paying
Agent to pay all money held by it to the Trustee and to account for any funds
disbursed. Upon such payment over to the Trustee and accounting for any funds
disbursed, such Paying Agent (if other than the Company, the Guarantor or a
Subsidiary) shall have no further liability for the money. If the Company, the
Guarantor or a Subsidiary acts as Paying Agent, it shall segregate and hold as
separate trust funds for the benefit of the Holders all money held by it as
Paying Agent.
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SECTION 3.11 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Note (or one or more Predecessor Notes) is registered at the close of
business on the Record Date for such interest specified in Article 3.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered Holder on the
relevant Record Date by virtue of having been such Holder; and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in Clause (1) or Clause (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Note and the date of the proposed payment (which date shall not be
earlier then thirty (30) days after the date of deposit of funds for
such payment), and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Note for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than
fifteen (15) nor less than five (5) Business Days prior to the date of
the proposed payment and not less than ten (10) days after the receipt
by the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the
name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder at
his address as it appears in the Note Register, not less than ten (10)
Business Days prior to such Special Record Date. The Trustee may, in
its discretion, in the name and at the expense of the Company, cause a
similar notice to be published at least once in a newspaper of general
circulation in the City of Phoenix, but such publication shall not be a
condition precedent to the establishment of such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the
Notes (or their respective Predecessor Notes) are registered on such
Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
Clause, such payments shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Note shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Note.
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ARTICLE 4
DISCHARGE OF INDENTURE
SECTION 4.1. TERMINATION OF COMPANY'S OBLIGATIONS.
(a) This Indenture shall cease to be of further effect (subject to
Section 4.5) when all outstanding Notes theretofore authenticated and issued
hereunder have been delivered (other than any Notes which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as provided
in Section 3.6) to the Trustee for cancellation and the Company or the Guarantor
has paid all sums payable hereunder and under the Notes.
(b) In addition to the provisions of Section 4.1(a) at the Company's
option, the Company and any Guarantor shall be deemed to have been discharged
from its obligations with respect to the Notes and the provisions of this
Indenture (subject to Section 4.5) on the 91st day after the applicable
conditions set forth below have been satisfied, except as to (i) rights of
registration, transfer, substitution and exchange of Notes and the Company's
right of optional redemption, (ii) rights of Holders to receive payments of
principal of, premium, if any, and interest on the Notes, and (iii) the rights,
obligations and immunities of the Trustee under the Indenture:
(1) the Company or any Guarantor shall have deposited or
caused to be deposited irrevocably with the Trustee in trust,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holders (i) U.S. Legal Tender or (ii) U.S. Government
Obligations, which through the payment of interest and principal in
respect thereof in accordance with their terms will provide (without
any reinvestment of such interest or principal), not later than one day
before the due date of any payment, U.S. Legal Tender or (iii) a
combination of (i) and (ii), in an amount sufficient, after payment of
all federal, state and local taxes or the charges or assessments in
respect thereto payable by the Trustee in the opinion (with respect to
(ii) and (iii)) of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee at or prior to the time of such deposit, to pay and
discharge each installment of principal of, premium, if any, and
interest on the outstanding Notes on the dates such installments are
due;
(2) the Company shall have delivered to the Trustee an
Officers' Certificate certifying as to whether the Notes are then
listed on a national securities exchange;
(3) if the Notes are then listed on a national securities
exchange, the Company shall have delivered to the Trustee an Officers'
Certificate to the effect that the Company's exercise of its option
under this Section would not cause the Notes to be delisted;
(4) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit which (A) is not cured by such
deposit, (B) shall occur as a result of such deposit, or (C) shall
occur on or before the 91st day after the date of such deposit and such
deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which the Company, any Guarantor
or any Subsidiary is a party or by which any of them is bound, as
evidenced to the Trustee in an Officers' Certificate delivered to the
Trustee concurrently with such deposit;
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(5) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that Holders will not recognize income, gain
or loss for federal income tax purposes as a result of the Company's
exercise of its option under this Section and will be subject to
federal income tax on the same amount and in the same manner and at the
same time as would have been the case if such option had not been
exercised, and, in the case of the Notes being discharged, accompanied
by a ruling to that effect received from or published by the Internal
Revenue Service (it being understood that (A) such Opinion of Counsel
shall also state that such ruling is consistent with the conclusions
reached in such Opinion of Counsel and (B) the Trustee shall be under
no obligation to investigate the basis of correctness of such ruling);
(6) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that the Company's exercise of its option
under this Section will not result in any of the Company, the Trustee
or the trust created by the Company's or any Guarantor's deposit of
funds hereunder becoming or being deemed to be an "investment company"
under the Investment Company Act of 1940, as amended;
(7) 90 days shall have passed (or any greater period of time
required by applicable bankruptcy or insolvency laws then in effect)
following the irrevocable deposit of trust funds pursuant to Section
4.l(b)(1) hereof, such that said funds will not be subject to any
bankruptcy or insolvency laws affecting creditors rights generally;
(8) the deposit of funds or securities as provided In Section
4.1(b)(1) hereof shall constitute the grant of a first priority
security interest in such funds or securities by the Company or any
Guarantor to the Trustee for and on behalf of the Holders, and the
possession thereof by Trustee shall perfect such first priority
security interest;
(9) the Company or any Guarantor shall have paid or duly
provided for payment of all amounts then due to the Trustee pursuant to
Section 6.6; and
(10) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for in this Section relating to the
satisfaction and discharge of this Indenture have been complied with.
SECTION 4.2. APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 4.1. It shall apply the deposited money
and the money from U.S. Government Obligations through the Paying Agent and in
accordance with the provisions of the Notes and this Indenture to the payment of
principal of, premium, if any, and interest on the Notes as and when due.
SECTION 4.3. REPAYMENT TO COMPANY.
The Trustee and the Paying Agent shall promptly pay to the Company, or
any Guarantor, as the case may be, upon the written request of the Company,
accompanied by a certificate of independent accountants, acceptable to the
Trustee, indicating the amount of the excess of any money or securities held by
them at any time in excess of amounts required to pay principal of or interest
on the Notes and to pay the expenses of the Trustee as set forth in Section 6.6.
The Trustee and the Paying Agent shall pay to the Company or any Guarantor, as
the case may be, upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years after the payment was
due on
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the Notes; Provided, however, that the Trustee or Paying Agent before being
required to make any such repayment, may at the expense of the Company cause to
be published once in a newspaper of general circulation in the City of Phoenix
or mail to each such Holder notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication or mailing any unclaimed balance of such money then
remaining will be paid to the Company or any Guarantor, as the case may be.
After repayment to the Company or any Guarantor, as the case may be, any Holder
entitled to such money shall thereafter, as an unsecured general creditor, look
(unless an applicable abandoned property law designates another Person) only to
the Company or any Guarantor, as the case may be, for payment, and all liability
of the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company or any Guarantor, as the case may be, as trustee
thereof, shall thereupon cease.
SECTION 4.4. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 4.1 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and the Guarantor(s)' obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 4.1 until such time as the Trustee or Paying Agent is permitted to apply
all such money or U.S. Government Obligations in accordance with Section 4.1;
provided, however, that if the Company or the Guarantor(s) has made any payment
of interest on or principal of any Notes because of the reinstatement of its
obligations, the Company or the Guarantor(s) shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
SECTION 4.5. SURVIVAL OF CERTAIN OBLIGATIONS.
Notwithstanding the satisfaction and discharge of this Indenture and of
the Notes referred to in Section 4.1(a) and (b), the respective obligations of
the Company, any Guarantor and the Trustee under Sections 3.3, 3.5, 3.6, 3.8,
3.10, 3.11, 4.2, 4.3, 4.4, 6.6, 10.4, 10.5 and 10.11 shall survive until the
Notes are no longer outstanding, and thereafter the obligations of the Company
and the Trustee under Sections 4.2, 4.3, 4.4 and 6.6 shall survive.
ARTICLE 5
REMEDIES
SECTION 5.1. EVENTS OF DEFAULT.
An "Event of Default" occurs upon:
(1) default by the Company or any Guarantor in the payment of principal
of, or premium, if any, on the Notes when due and payable at Maturity, upon
redemption, or upon repurchase pursuant to Section 10.11, 10.16 or 10.17
(whether or not such payment shall be prohibited by the provisions of
Articles 11 or 14), upon acceleration or otherwise;
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(2) default by the Company, the Guarantor or any Subsidiary Guarantor
in the payment of any installment of interest on the Notes when due and payable
and continuance of such default for thirty (30) days (whether or not such
payment shall be prohibited by the provisions of Articles 11 or 14);
(3) default on any other Indebtedness of the Company, the Guarantor or
any Subsidiary Guarantor if such default results in the acceleration of the
maturity of any such Indebtedness having a principal amount of $2,000,000 or
more individually or, taken together with the principal amount of any other such
Indebtedness in default or the maturity of which has been so accelerated, in the
aggregate;
(4) default in the performance, or breach, of any other covenant or
agreement of the Company, the Guarantor or any Subsidiary Guarantor in this
Indenture, the Notes or the Guarantee and failure to remedy such default within
a period of thirty (30) days after written notice thereof from the Trustee or
Holders of 25% in principal amount of the then outstanding Notes;
(5) the entry by a court of one or more judgments or orders against the
Company, the Guarantor or any Subsidiary of either of them in an aggregate
amount in excess of $1,000,000 (net of applicable insurance coverage by a third
party insurer which is acknowledged in writing by such insurer) that has not
been vacated, discharged, satisfied or stayed pending appeal within sixty (60)
days from the entry thereof;
(6) the Guarantee of the Guarantor shall cease to be in full force or
effect (other than a release of a Guarantee in accordance with Section 13.3) or
any Guarantor shall deny or disaffirm its obligation with respect thereto
(7) the Company, the Guarantor or any Subsidiary Guarantor pursuant to
or within the meaning of any bankruptcy law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief against it in
an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) admits in writing that it generally is unable to pay its
debts as the same become due; or
(8) a court of competent jurisdiction enters an order or decree under
any bankruptcy law that:
(A) is for relief (with respect to the petition commencing
such case) against the Company, the Guarantor or any Subsidiary Guarantor in an
involuntary case or proceeding,
(B) appoints a Custodian of the Company, the Guarantor or any
Subsidiary Guarantor for all or substantially all of its respective property, or
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(C) orders the liquidation of the Company, the Guarantor or
any Subsidiary Guarantor, and the order or decree remains unstayed and in effect
for 60 days.
The term "bankruptcy law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any bankruptcy
law.
SECTION 5.2. INTEREST RATE UPON DEFAULT. If an Event of Default on the
Notes shall occur, the annual rate of interest shall increase to four percent
(4%) over the interest rate the Notes then bear, which amount shall accrue on
the indebtedness evidenced by the Notes from such date for such period of time
until the default is cured.
SECTION 5.3. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default occurs and is continuing, then and in every such
case the Trustee or the Holders of not less than twenty-five (25%) percent in
principal amount of the Notes Outstanding may declare the unpaid principal,
premium, if any, and accrued and unpaid interest of all the Notes to be due and
payable immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), and upon any such declaration such principal, premium, if
any, and accrued and unpaid interest shall become immediately due and payable,
notwithstanding anything contained in this Indenture or the Notes or the
Guarantee to the contrary. If an Event of Default specified in Section 5.1(7) or
5.1(8) above occurs, all unpaid principal of, and accrued interest on, the Notes
then outstanding will become due and payable, without any declaration or other
act on the part of the Trustee or any Holder.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount of the Notes Outstanding, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay
(A) all overdue installments of interest on all Notes,
(B) the principal of (and premium, if any, on) any Notes which
have become due otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the Notes,
(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest at the rate borne by the
Notes, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default, other than the nonpayment of the principal
of Notes which have become due solely by such acceleration, have been cured or
waived as provided in Section 5.14.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
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SECTION 5.4. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any installment of interest on
any Note when such interest becomes due and payable and such default continues
for a period of thirty (30) days, or
(2) default is made on the payment of the principal of (or premium, if
any, on) any Note at the Maturity thereof, or upon repurchase pursuant to
Section 10.11, 10.16 or 10.17 (whether or not such payment shall be
prohibited by the provisions of Articles 11 or 14), upon acceleration or
otherwise, the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Notes, the whole amount then due and payable on
such Notes for principal (and premium, if any) and interest, with interest upon
the overdue principal (and premium, if any) and, to the extent that payment of
such interest shall be legally enforceable, upon overdue installments of
interest, at the rate borne by the Notes; and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company, the Guarantor, or any other obligor upon the Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company, the Guarantor, or any other obligor upon
the Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 5.5. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company, the Guarantor, or any other obligor
upon the Notes or the property of the Company, the Guarantor, or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Notes
and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding, and
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(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator (or other similar
official) in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.6.
The Trustee shall not be required to join the Holders as necessary parties
to any such judicial proceeding; provided, however, that nothing herein
contained shall be deemed to authorize the Trustee to authorize and consent to
or accept, or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of the claim of
any Holder in any such proceeding.
SECTION 5.6. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture, the Notes or the
Guarantee may be prosecuted and enforced by the Trustee without the possession
of any of the Notes or the Guarantee or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Notes in respect of which such
judgment has been recovered.
SECTION 5.7. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Notes and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid;
FIRST: To the payment of all amounts due the Trustee under Section 6.6;
SECOND: To the payment of the amounts then due and unpaid upon the Notes
for principal (and premium, if any) and interest, in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such Notes,
for principal (and premium, if any) and interest; and
THIRD: To the Company.
SECTION 5.8. LIMITATION ON SUITS.
No Holder of any Note shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
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Trustee or to Holders may be exercised from time to time and as often as may be
deemed expedient by the Trustee or by the Holders, as the case may be.
SECTION 5.13. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding Notes
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or with
this Indenture; and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 5.14. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Notes may on behalf of the Holders of all the Notes waive any past
default hereunder and its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or interest on
any Note, or
(2) in respect of a covenant or provision hereof which under Article 9
cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 5.15. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Note by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the Trustee
or any Holder for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Note on or after the Stated Maturity
expressed in such Note or any other suit instituted by the Trustee for the
enforcement of any rights or remedy under this Indenture, or any suit by Holders
of more than 10% in principal amount of the then Outstanding Notes.
SECTION 5.16. WAIVER OF STAY OR EXTENSION LAWS.
The Company and the Guarantor each covenant (to the extent that it or they
may lawfully do so) that it or they will not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the Company
and the
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Guarantor each (to the extent that it or they may lawfully do so) hereby
expressly waive all benefit or advantage of any such law, and covenants that it
or they will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ARTICLE 6
THE TRUSTEE
SECTION 6.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such rights and powers vested in it by this Indenture and use the
same degree of care and skill in such exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are specifically
set forth (or incorporated by reference) in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall be under a duty to examine such certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) This paragraph (c) does not limit the effect of paragraph (b) of
this Section.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by an authorized representative of the Trustee, unless it is
proved that the Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to action it takes
or omits to take in good faith in accordance with a direction received by
it pursuant to Section 5.13, and the Trustee shall be entitled from time
to time to request such a direction.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to this Section.
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(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights and powers, unless it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
reasonably assured to it.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 6.2. RIGHTS OF TRUSTEE.
Subject to Section 6. 1:
(a) The Trustee may rely on and shall be protected in acting or refraining
from acting upon any document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation into such facts
or matters as it determines to be necessary, and, if the Trustee shall determine
to make such further inquiry or investigation, it shall be entitled to examine
the books, records and premises of the Company, personally or by agent or
attorney, to the extent reasonably required by such inquiry or investigation.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
certificate or opinion if the certificate or opinion conforms to any applicable
requirements of this Indenture.
(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts.
(e) The Trustee shall not be charged with knowledge of an Event of Default
unless a Responsible Officer of the Trustee obtains written notice of such Event
of Default.
(f) The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company
and the Guarantor, and the Trustee assumes no responsibility for the correctness
of the same. The Trustee makes no representation as to the validity or
sufficiency of this Indenture, the Guarantee or the Notes. The Trustee shall not
be accountable for the use or application by the Company of any of the Notes or
the proceeds thereof.
SECTION 6.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual, or any other capacity, may become the owner
or pledgee of Notes and may otherwise deal with the Company or the Guarantor
with the same rights it would have if it were
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not Trustee. Any Note Registrar or Paying Agent may do the same with like
rights. However, the Trustee must comply with Section 6.9 and 6.10.
SECTION 6.4. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Notes, it shall not be accountable for the Company's use of the
proceeds from the Notes, and it shall not be responsible for any statement in
the Notes other than its certificate of authentication.
SECTION 6.5. NOTICE OF DEFAULTS.
If a Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to each Holder pursuant to Section 1.6 a notice of the
Default within 90 days after it occurs, unless such default shall have been
cured or waived. Except in the case of a Default in any payment of principal or
interest on any Note, the Trustee may withhold the notice if and so long as the
board of directors, executive committee or a trust committee of its directors
and/or Responsible Officers in good faith determines that withholding the notice
is in the interests of Holders.
SECTION 6.6. COMPENSATION AND INDEMNITY.
The Company and the Guarantor jointly and severally agree to pay the
Trustee from time to time reasonable compensation for its services (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust). The Company and the Guarantor
jointly and severally agree to reimburse the Trustee upon request for all
reasonable out-of-pocket expenses, disbursements and advances incurred by it,
except any such expense, disbursement or advance as may be attributable to its
negligence, bad faith or willful misconduct. Such expenses may include the
reasonable compensation and expenses of the Trustee's agents and counsel.
The Trustee shall not be under any obligation to institute any suit, or
take any remedial action under this Indenture, or to enter any appearance or in
any way defend any suit in which it may be a defendant, or to take any steps in
the execution of the trusts created hereby or thereby or in the enforcement of
any rights and powers under this Indenture, unless it shall be indemnified to
its satisfaction against any and all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provisions of
this Indenture, including compensation for services, costs, expenses, outlays,
counsel fees and other disbursements, and against all liability not due to its
negligence or willful misconduct. The Company and the Guarantor jointly and
severally agree to indemnify the Trustee for, from and against any loss or
liability incurred by the Trustee in connection with the acceptance and
administration of the trust and its duties hereunder as Trustee, Note Registrar
and/or Paying Agent, including the reasonable costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Trustee shall notify
the Company and the Guarantor of any claim for which it may seek indemnity;
however, unless the position of the Company is prejudiced by such failure, the
failure of the Trustee to promptly notify the Company shall not limit its right
to indemnification. The Company shall defend each such claim and the Trustee
shall cooperate in the defense. The Trustee may retain separate counsel, but the
Company shall only be required to reimburse the Trustee for the reasonable fees
and expenses of such counsel if (a) the Company has not assumed the defense of
such action; (b) a conflict of interest between the Company and the Trustee
exists; or (c) a court of competent jurisdiction orders such reimbursement. The
Company need not pay for any settlement made without its consent.
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Neither the Company nor the Guarantor shall be obligated to reimburse any
expense or indemnify against any loss or liability successfully alleged to have
been incurred by the Trustee through the Trustee's negligence, bad faith or
willful misconduct.
To secure the payment obligations of the Company and the Guarantor in this
Section, the Trustee shall have a claim prior to that of the Holders of the
Notes on all money or property held or collected by the Trustee, except that
held in trust pursuant to Article 4 of this Indenture to pay principal of and
interest on particular Notes.
When the Trustee incurs expenses or renders services after the occurrence
of any Event of Default specified in Sections 5.1(7) or (8), the expenses and
the compensation for the services are intended to constitute expenses of
administration with respect to any Insolvency or Liquidation Proceeding.
SECTION 6.7. REPLACEMENT OF TRUSTEE.
The Trustee may resign by so notifying the Company and the Guarantor in
writing. The Holders of a majority in principal amount of the Notes may remove
the Trustee by so notifying the Trustee, in writing. The Company may remove the
Trustee if:
(1) the Trustee fails to comply with Section 6.9;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting as Trustee hereunder.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the Notes may appoint a successor Trustee
to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company and the Guarantor. Immediately after
that, the retiring Trustee shall transfer all property held by it as Trustee to
the successor Trustee, and subject to the rights of the retiring Trustee under
Section 6.6, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall
mail notice of its succession to each Holder.
If a successor Xxxxxxx does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of majority in principal amount of the Notes may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.9, any Holder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee. Any successor Trustee shall comply with TIA
Section 310(a)(1), (2) and (5) and the requirements of Section 6.9 hereof.
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SECTION 6.8. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust assets to, another corporation, the
successor corporation without any further act shall be the successor Trustee;
provided such corporation or association shall be otherwise eligible and
qualified under this Article.
SECTION 6.9. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1). The Trustee shall always have a combined capital and
surplus of at least $100,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall also comply with TIA Section
310(b).
SECTION 6.10. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311 (a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee
semi-annually, not less than fifteen (15) days nor more than thirty (30) days
after each Interest Payment Date, and at such other times as the Trustee may
request in writing, within fifteen (15) days after receipt by the Company of any
such request, a list in such form as the Trustee may reasonably require
containing all the information in the possession or control of the Company, or
any of its Paying Agents other than the Trustee, as to the name and addresses of
the Holders, obtained since the date of which the next previous list, if any,
was furnished; provided, however, that no such list need be furnished so long as
the Trustee is the Note Registrar. Any such list may be dated as of a date not
more than 15 days prior to the time such information is furnished or caused to
be furnished and need not include information received after such date.
SECTION 7.2. PRESERVATION OF INFORMATION: COMMUNICATIONS TO HOLDERS
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of Holders (A)
contained in the most recent list furnished to it as provided in Section 7.1,
and (B) received by it in the capacity of Paying Agent or Note Registrar (if so
acting) hereunder.
The Trustee may (i) destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished, (ii) destroy any
information received by it as Paying Agent or Note Registrar (if so acting)
hereunder upon delivering to itself as Trustee, not earlier than fifteen (15)
days after an Interest Payment Date of the Notes, a list containing the names
and addresses of the Holders obtained from such
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information since the delivery of the next previous list, if any, and (iii)
destroy any list delivered to itself as Trustee which was compiled from
information received by it as Paying Agent or Note Registrar (if so acting)
hereunder upon the receipt of a new list so delivered.
(b) If three (3) or more Holders (hereinafter referred to as "applicants")
apply in writing to the Trustee, and furnish to the Trustee reasonable proof
that each such applicant has owned a Note for a period of at least six (6)
months preceding the date of such application, and such application states that
the applicants desire to communicate with other Holders with respect to their
rights under this Indenture or under the Notes and is accompanied by a copy of
the form of proxy or other communication which such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, at its election, either
(i) afford such applicants access to the information preserved at
the time by the Trustee in accordance with Section 7.2(a), or
(ii) inform such applicants as to the approximate number of Holders
whose names and addresses appear in the information preserved at the time
by the Trustee in accordance with Section 7.2(a), and as to the
approximate cost of mailing to such Holders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appear in the information preserved
at the time by the Trustee in accordance with Section 7.2(a), a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender, the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interests of the Holders
or would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Holders with reasonable promptness after the
entry of such order and the renewal of such tender; otherwise the Trustee shall
be relived of any obligation or duty to such applicants respecting their
application.
(c) Each and every Holder of the Notes, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any Paying Agent nor any Note Registrar shall be held accountable by reason
of the disclosure of any such information as to the names and addresses of the
Holders in accordance with Section 7.2(b).
SECTION 7.3. REPORTS BY TRUSTEE.
Within sixty (60) days after each September 15, beginning with September
15, 1994, the Trustee shall mail to each Holder a brief report dated as of such
September 15 that complies with TIA Section 313(a), but only if such report is
required in any year under TIA Section 313(a). The Trustee also shall comply
with TIA Section 313(b), Section 313(c) and Section 313(d). A copy of each
report at the time of its mailing to Holders shall be filed with the SEC and
each stock exchange on which the Notes are listed. The Company shall notify
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the Trustee in writing if the Notes become listed on any national securities
exchange or of any delisting thereof.
SECTION 7.4. REPORTS BY COMPANY.
The Company will
(1) file with the Trustee and the Placement Agent, within fifteen (15)
days after the Company is required to file the same with the Commission, copies
of the annual reports and of the information, documents, and other reports (or
copies of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act; or, if the Company is not required to file information, documents or
reports pursuant to either of said Sections, then it will file with the
Trustee, the Commission and the Placement Agent in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a National Securities Exchange or the National
Association of Securities Dealers Automated Quotations System as may be
prescribed from time to time in such rules and regulations;
(2) file with the Trustee, the Commission and the Placement Agent, in
accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants of this Indenture as
may be required from time to time by such rules and regulations; and
(3) transmit to the Holders (with a copy to the Placement Agent), within
thirty (30) days after the filing thereof with the Trustee, in the manner and to
the extent provided in Section 7.2(c), copies of its annual report and quarterly
reports on Form 10-Q and such summaries of any information, documents and
reports required to be filed by the Company pursuant to paragraphs (1) and (2)
of this Section as may be required by rules and regulations prescribed from time
to time by the Commission.
ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
SECTION 8.1. COMPANY AND GUARANTOR MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS.
The Company and/or Guarantor shall not consolidate with or merge into any
other corporation or convey or transfer or lease its or their properties and
assets substantially as an entirety to any Person, unless:
(1) the corporation formed by such consolidation or into which the Company
and/or Guarantor is merged or the Person which acquires by conveyance, transfer
or lease the properties or assets of the Company and/or Guarantor substantially
as an entirety shall be a corporation organized and existing under the laws of
the United States of America or any State or the District of Columbia, and
shall, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, expressly assume the due and
punctual payment of the principal of (and premium, if any)
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and interest on all Notes and the performance of every covenant of this
Indenture on the part of the Company and/or Guarantor to be performed or
observed;
(2) immediately before and after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default, shall have happened and be continuing;
(3) immediately after giving effect to such transaction on a pro forma
basis, the Consolidated Tangible Net Worth of the Company and/or Guarantor (or
the surviving or transferee entity) is equal to or greater than the Consolidated
Tangible Net Worth of the Company and/or Guarantor immediately before such
transaction;
(4) immediately after giving effect to such transaction on a pro forma
basis, the Company (or the surviving or transferee entity) would be able to
incur $1.00 of additional Indebtedness under the test described in Section 10.9,
provided, however, that the provisions of this clause (4) shall not apply to a
merger of the Company and/or Guarantor with and into a Wholly-Owned Subsidiary
thereof, and
(5) the Company and/or Guarantor delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger, conveyance or transfer and such supplemental indenture comply with this
Article and such supplemental indenture is binding and enforceable against the
surviving or transferee entity and that all conditions precedent herein provided
for relating to such transaction have been complied with.
SECTION 8.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any conveyance, transfer or lease of
the properties and assets of the Company and/or the Guarantor substantially as
an entirety in accordance with Section 8.1, the successor corporation formed by
such consolidation or into which the Company and/or the Guarantor is merged or
into which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company and/or
the Guarantor under this Indenture with the same effect as if such successor
corporation had been named as the Company or the Guarantor, as the case may be,
herein and thereafter (except in the case of a lease) the predecessor
corporation will be relieved of all further obligations and covenants under this
Indenture and the Notes.
SECTION 8.3. NOTES TO BE SECURED IN CERTAIN EVENTS.
If, upon any such consolidation of the Company and/or Guarantor with or
merger of the Company and/or Guarantor with or into any other corporation, or
upon any conveyance, lease or transfer of the property of the Company and/or
Guarantor substantially as an entirety to any other Person, any property or
assets of the Company and/or Guarantor would thereupon become subject to any
Lien of Subordinated Indebtedness of the Company, or the Guarantor, then unless
such Lien could be created pursuant to Section 10.12 without equally and
ratably securing the Notes, the Company and/or Guarantor, prior to or
simultaneously with such consolidation, merger, conveyance, lease or transfer,
will as to such property or assets, secure the Notes Outstanding (together with,
if the Company and/or Guarantor shall so determine, any other Indebtedness of
the Company and/or Guarantor or any Subsidiary now existing or hereinafter
created which is not subordinate in right of payment to the Notes) prior to the
Indebtedness which upon such consolidation, merger, conveyance, lease or
transfer is to become secured as to such property or assets by such Lien, or
will cause such Notes to be so secured.
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ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, the Trustee, and the Guarantor, any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company, and
the assumption by any such successor of the covenants of the Company herein and
in the Notes contained; or
(2) to add to the covenants of the Company, for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company;
or
(3) to cure any ambiguity, to correct or supplement any provision herein
which may be inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Indenture
which shall not be inconsistent with the provisions of this Indenture, provided
such action shall not adversely affect the interest of the Holders; or
(4) to add to the conditions, limitations, and restrictions on the
authorized amount, terms, or purposes of issue, authentication, and delivery of
Notes, as herein set forth, additional conditions, limitations, and restrictions
thereafter to be observed, provided such action shall not adversely affect the
interest of the Holders; or
(5) to reflect the addition or release of any Subsidiary Guarantor, as
provided for by this Indenture; or
(6) to modify, eliminate, or add to the provisions of this Indenture to
such extent as shall be necessary to effect the qualifications of this Indenture
under the TIA, or under any similar federal statute hereafter enacted, and to
add to this Indenture such other provisions as may be expressly permitted by the
TIA, excluding, however, the provisions referred to in Section 316(a)(2) of the
Trust Indenture Act or any corresponding provision in any similar federal
statute hereafter enacted.
SECTION 9.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of Holders of not less than a majority in principal
amount of the Outstanding Notes by Act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by a Board Resolution, the Trustee
and the Guarantor may enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders under this Indenture; provided, however, that
no such supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(1) change the Maturity Date of the principal of, or any installment of
interest on, any Note, or reduce the principal amount thereof or the interest
thereon or any premium payable upon the redemption thereof, or change any place
of payment where, or the coin or currency in which, any Note
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or the interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Maturity Date, or, in the
case of redemption, on or after the date of the redemption;
(2) reduce the percentage in principal amount of the Outstanding Notes,
the consent of whose Holders is required for any such supplemental Indenture, or
the consent of whose Holders is required for any waiver (of compliance with
certain provisions of this Indenture or certain defaults hereunder or their
consequences) provided for in this Indenture;
(3) modify any of the provisions of this Section or Section 5.14 except
to increase any such percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of the Holder of
each Note affected thereby;
(4) subordinate the Indebtedness evidenced by the Notes to any
Indebtedness of the Company other than Senior Indebtedness, as provided in
Article II, or
(5) reduce the redemption price, including premium, if any, payable upon
the repurchase of any Note pursuant to Section 10.11, 10.16 or 10.17 or change
the time at which any Note may or shall be repurchased thereunder.
After an amendment under this Section 9.2 becomes effective, the Company
shall mail to the Holders affected thereby a notice briefly describing the
amendment or supplement. Any failure of the Company to mail such notice, or
defect therein, shall not, however, impair or effect the validity of any such
amendment or supplement.
SECTION 9.3. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture the Trustee shall be entitled to receive,
and (subject to Section 6.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.4. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
SECTION 9.5. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the TIA as then in effect.
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SECTION 9.6. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Notes so
modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
ARTICLE 10
Covenants
SECTION 10.1. PAYMENT OF NOTES.
The Company shall pay the principal of, premium, if any, and interest on,
the Notes on the dates and in the manner provided in the Notes and this
Indenture. Principal, premium and interest shall be considered paid on the date
due if the Trustee or Paying Agent holds on that date money deposited by the
Company designated for and sufficient to pay all principal, premium and interest
then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any bankruptcy law) on overdue principal, and premium, if any,
at the rate borne by the Notes to the extent lawful; and it shall pay interest
(including post-petition interest in any proceeding under any bankruptcy law) on
overdue installments of interest (without regard to any applicable grace period)
at the same rate to the extent lawful.
SECTION 10.2. COMMISSION REPORTS.
(a) The Company shall file with the Trustee and with the Placement Agent
within fifteen (15) days after it files the same with the Commission, copies of
the annual reports and the information, documents and other reports (or copies
of any such portions of any of the foregoing as the Commission may by rules and
regulations prescribe) that the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. If the Company is not
subject to the requirements of such Section 13 or 15(d), the Company shall file
with the Trustee and with the Placement Agent within 15 days after it would have
been required to file the same with the Commission, financial statements,
including any notes thereto (and with respect to annual reports, an auditors'
report by a firm of established national reputation), and a "Management's
Discussion and Analysis of Financial Condition and Results of Operations," both
comparable to that which the Company would have been required to include in such
annual reports, information, documents or other reports if the Company had been
subject to the requirements of such Section 13 or 15(d). The Company, the
Guarantor (to the extent its financial statements are not consolidated with
those of the Company) and each Subsidiary Guarantor shall also comply with the
provisions of TIA Section 314(a).
(b) If the Company is required to furnish annual or quarterly reports to
its stockholders pursuant to the Exchange Act, the Company shall cause any
annual report furnished to its stockholders generally and any quarterly or other
financial reports furnished by it to its stockholders generally to be filed with
the Trustee and mailed to the Holders at their addresses appearing in the
register of Notes
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maintained by the Note Registrar and to the Placement Agent at their addresses
set forth herein. If the Company is not required to furnish annual or quarterly
reports to its stockholders pursuant to the Exchange Act, the Company shall
cause its financial statements referred to in Section 10.3(b), including any
notes thereto (and with respect to annual reports, an auditors' report by a firm
of established national reputation), and a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" to be so mailed to the Holders
and to the Placement Agent at their addresses set forth herein within ninety
(90) days after the end of each of the Company's fiscal years and within sixty
(60) days after the end of each of the Company's first three fiscal quarters.
(c) The Company shall provide the Trustee and the Placement Agent with a
sufficient number of copies of all reports and other documents and information
that the Company or the Trustee may be required to deliver to Holders under this
Section.
SECTION 10.3. COMPLIANCE CERTIFICATES.
(a) The Company and the Guarantor shall deliver to the Trustee, within
ninety (90) days after the end of each fiscal year of the Company, an Officers'
Certificate stating that a review of the activities of the Company, the
Guarantor and their Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
the Company and the Guarantor have kept, observed, performed and fulfilled their
respective obligations under this Indenture, and further stating, as to each
such Officer signing such certificate, that, to the best of such Officer's
knowledge, the Company and the Guarantor and each Subsidiary Guarantor have
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and are not in default in the performance or observance of any of
the terms, provisions and conditions hereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which such Officer may have knowledge and what action the Company and the
Guarantor are taking or propose to take with respect thereto) and that, to the
best of such Officer's knowledge, no event has occurred and remains in existence
by reason of which payments on account of the principal of, premium, if any, or
interest, if any, on the Notes are prohibited or, if such event has occurred, a
description of the event and what action the Company and the Guarantor and each
Subsidiary Guarantor are taking or propose to take with respect thereto. Such
Officers' Certificate shall comply with TIA Section 314(a)(4). Such Officer's
Certificate may state the foregoing on behalf of the Company, the Guarantor and
each Subsidiary Guarantor, provided such Officers' Certificate is signed by the
respective officers of the Company and the Guarantor.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 10.2 shall be accompanied by a written
statement of the Company's independent public accountants (which shall be a firm
of established national reputation) that in making the examination necessary for
certification of such financial statements nothing has come to their attention
that would lead them to believe that the Company or the Guarantor has violated
any provisions of Articles 8 or 10 of this Indenture (to the extent such
provisions relate to accounting matters) or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company and the Guarantor will, so long as any of the Notes are
Outstanding, deliver to the Trustee within five (5) days of any Officer becoming
aware of any Default or Event of Default or Default in the performance of any
covenant, agreement or condition contained in this
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Indenture, an Officer's Certificate specifying such Default or Event of Default
and what action the Company and/or the Guarantor or any Subsidiary Guarantor
proposes to take with respect thereto.
SECTION 10.4. MAINTENANCE OF OFFICE OR AGENCY.
The Company and the Guarantor will maintain in Phoenix, Arizona, an office
or agency where Notes may be surrendered for registration of transfer or
exchange or for presentation for payment and where notices and demands to or
upon the Company or the Guarantor in respect of the Notes and this Indenture may
be served. The Company and the Guarantor will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company or the Guarantor shall fail to maintain any
required office or agency or shall fail to furnish the Trustee with the address
thereof, such surrenders, presentations, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, that no
such designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in Phoenix, Arizona, for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
SECTION 10.5. CORPORATE EXISTENCE.
The Company and the Guarantor will do or cause to be done all things
necessary to preserve and keep in full force and effect their respective
corporate existence and the corporate, partnership or other existence of each
Subsidiary thereof and all rights (charter and statutory) and franchises of the
Company and/or the Guarantor and the Subsidiaries thereof, provided, that the
Company shall not be required to preserve the corporate existence of any
Subsidiary which is not a material Subsidiary Guarantor, or any such right or
franchise, if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and that the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 10.6. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company, the Guarantor and each material Subsidiary Guarantor
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay, extension, or usury law or other law, which would
prohibit or forgive the Company or any material Subsidiary Guarantor and the
Guarantor from paying all or any portion of the principal of, premium, if any,
or interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Indenture; and (to the extent that it may lawfully do so) the Company and
each material Subsidiary Guarantor and the Guarantor hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
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SECTION 10.7. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company and the Guarantor shall pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (a) all taxes,
assessments and governmental charges levied or imposed upon the Company or the
Guarantor, as the case may be, or any Subsidiary thereof or upon the income,
profits or property of the Company or the Guarantor, as the case may be, or any
Subsidiary and (b) all lawful claims for labor, materials and supplies which, if
unpaid, might by law become a Lien upon the property of the Company or the
Guarantor, as the case may be, or any Subsidiary thereof; provided, however,
that the Company and the Guarantor shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 10.8. MAINTENANCE OF PROPERTIES AND INSURANCE; LINE OF BUSINESS.
(a) The Company and the Guarantor shall cause all properties used or held
for use in the conduct of their respective businesses or the business of any
Subsidiary thereof to be maintained and kept in good condition, repair and
working order (ordinary wear and tear excepted) and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company or the Guarantor, as the case may be, may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent the Company or the Guarantor from discontinuing the operation or
maintenance of any such property, or disposing of it, if such discontinuance or
disposal is, in the reasonable judgment of the Company and/or the Guarantor, as
the case may be, desirable in the conduct of their respective businesses and not
disadvantageous in any material respect to the Holders.
(b) The Company and the Guarantor shall each provide or cause to be
provided, for itself and each of its respective Subsidiaries, insurance
(including appropriate self-insurance) against loss or damage of the kinds that,
in the reasonable, good faith opinion of the Company and/or the Guarantor are
adequate and appropriate for the conduct of the respective businesses of the
Company and the Guarantor and such Subsidiaries in a prudent manner, with
reputable insurers or with the government of the United States or an agency or
instrumentality thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the reasonable good faith opinion of the
Company and/or the Guarantor, for corporations similarly situated in the
industry.
(c) For as long as any Notes are outstanding, the Company shall not, and
shall not permit any of its Subsidiaries to, engage in any business or activity
other than the Principal Business.
SECTION 10.9. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.
(a) The Company and the Guarantor will not, and will not permit any of
their respective Subsidiaries, directly or indirectly, to issue, incur, assume,
guarantee, become liable, contingently or otherwise, with respect to or
otherwise become responsible for the payment of (collectively, "incur")
additional Indebtedness after the issuance of the Notes and the date of this
Indenture; provided, however, that if no Default or Event of Default with
respect to the Notes shall have occurred and be continuing at the time or as a
consequence at the incurrence of such Indebtedness, the Company, the Guarantor
or their Subsidiaries may incur Indebtedness if, on a pro forma basis, after
giving effect to such incurrence and the application of the proceeds therefrom,
(i) the Consolidated Coverage Ratio would have been equal to or greater than 2
to 1 and (ii) the Indebtedness to Consolidated Net Worth ratio with respect to
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Indebtedness incurred is not greater than 9.0 to I on or prior to September 30,
1995, not greater than 6.75 to 1 on or prior to September 30, 1996, not greater
than 4.5 to 1 on or prior to September 30, 1997 and not greater than 3.0 to 1 on
or prior to September 30, 1998 with respect to Indebtedness incurred thereafter.
(b) Notwithstanding the foregoing, (i) the Guarantor may incur the
Guarantee of the Notes; (ii) the Company may incur Permitted Company Refinancing
Indebtedness; (iii) any Subsidiary may incur Permitted Subsidiary Refinancing
Indebtedness; (iv) the Company may incur Indebtedness to any Wholly-Owned
Subsidiary, and any Subsidiary may incur Indebtedness solely to the Company or
to any Wholly-Owned Subsidiary of the Company, and (v) the Company and the
Guarantor may incur additional Indebtedness pursuant to their secured lines of
credit to satisfy obligations to vendors and subcontractors for construction
work in progress performed by the Company and Guarantor during the term of this
Indenture and to purchase lots pursuant to purchase agreements or options with
respect to which the Company has received nonrefundable deposits. Such
construction work in progress shall include homes and land improvements in
process and future construction of homes pursuant to purchase contracts with
non-refundable deposits.
(c) Any Indebtedness of a Person existing at the time such Person becomes
a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall
be deemed to be incurred by such Subsidiary at the time it becomes a Subsidiary.
SECTION 10.10. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company and the Guarantor will not, and will not permit any of
their respective Subsidiaries to, directly or indirectly, make any Restricted
Payment, unless:
(i) no Default or Event of Default shall have occurred (or an event
that through the passage of time or the giving of notice, or both, would
become an Event of Default) and be continuing at the time of or
immediately after giving effect to such Restricted Payment;
(ii) at the time of and immediately after giving effect to such
Restricted Payment, the Company would be able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to
Section 10.9(a); and
(iii) immediately after giving effect to such Restricted Payment,
the aggregate of all Restricted Payments declared or made after the Issue
Date does not exceed the sum of (A) 50% of the Consolidated Net Income of
the Company and the Guarantor and their respective Subsidiaries (or in the
event such Consolidated Net Income shall be a deficit, minus 100% of such
deficit) during the period (treated as one accounting period) subsequent
to December 31, 1993 and ending on the last day of the fiscal quarter
immediately preceding the date of such Restricted Payment; (B) the
aggregate Net Cash Proceeds, and the fair market value of the property
other than cash (as determined in good faith by the Company's and/or the
Guarantor's Board of Directors, as the case may be, and evidenced by a
resolution of such Board), received by the Company or the Guarantor during
such period from any person other than a Subsidiary of the Company or the
Guarantor as a result of the issuance or sale of Capital Stock of the
Company or the Guarantor, as the case may be, (other than any Disqualified
Stock), other than in connection with the conversion of Indebtedness or
Disqualified Stock; plus (C) the
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aggregate Net Cash Proceeds, and the fair market value of property other
than cash (as determined in good faith by the Company's or the Guarantor's
Board of Directors and evidenced by a resolution of such Board), received
by the Company or the Guarantor during such period from any person other
than a Subsidiary of the Company or the Guarantor as a result of the
issuance or sale of any Indebtedness or Disqualified Stock to the extent
that at the time the determination is made such Indebtedness or
Disqualified Stock, as the case may be, has been converted into or
exchanged for Capital Stock of the Company or the Guarantor (other than
Disqualified Stock).
(b) Notwithstanding the foregoing, and provided that no Default or Event
of Default has occurred (or an event that through the passage of time or the
giving of notice, or both, would become an Event of Default) and is continuing
at the time, or shall occur as a result, of any of the actions contemplated in
clause (i) above, the above limitations will not prevent (i) the payment of any
dividend within sixty (60) days after the date of declaration thereof, if at
such date of declaration such payment complied with the provisions hereof; (ii)
the purchase, redemption, acquisition or retirement of any shares of Capital
Stock of the Company or the Guarantor in exchange for, or out of the net
proceeds of the substantially concurrent sale of, other shares of Capital Stock
(other than Disqualified Stock) of the Company or the Guarantor; (iii) the
defeasance, redemption or retirement of Indebtedness of the Company which is
pari passu or subordinate in right of payment to the Notes, in exchange for, by
conversion into, or out of the net proceeds of the substantially concurrent
issue or sale of Capital Stock (other than Disqualified Stock) of the Company or
the Guarantor; or (iv) distributions by the Company or the Guarantor to their
respective shareholders which, subsequent to the Issue Date, do not exceed:
(A) an amount equal to the sum, for all federal income taxable years of
the Company and the Guarantor ending subsequent to the Issue Date and during
which the Company and the Guarantor are qualified as "S" corporations under
Subchapter S of the Internal Revenue of 1986, as amended (the "Code"), of the
greater of (x) the sum of (I) the product of (i) all items of income, less all
items of deduction allocable to the Company's and the Guarantor's shareholders
for federal income tax purposes for each such year as a result of the Company's
and the Guarantor's S Corporation status, multiplied by (ii) the highest
individual federal income tax rate for each taxable year, minus (II) all items
of credit allocable to the Company's and the Guarantor's shareholders for
federal income tax purposes for each year, and (y) the amount determined under
clause 10.10(a)(iii)(A) hereof for federal alternative minimum tax purposes
("Permitted Federal Tax Distributions");
(B) an amount equal to the sum, for all state and local income taxable
years of the Company ending subsequent to the Issue Date of the greater of, for
each such year (x) the sum of (I) the product of (i) all items of income, less
all items of deduction allocable to the Company's shareholders for state and
local income tax purposes for each such taxable year under the provisions of the
relevant local revenue and taxation code (the "Local Code"), consistent with
Subchapter S of the Code or any comparable term under the Local Code, multiplied
by the highest individual income tax rate under the Local Code, minus (II) all
items of credit allocable to the Company's and the Guarantor's shareholders for
Local Code purposes for each taxable year and (y) the amount determined under
clause 10.10(a)(iii)(A) hereof for alternative minimum tax purposes under the
Local Code (together with Permitted Federal Tax Distributions, "Permitted Tax
Distributions"); and
(C) an amount equal to the balance of the Company's and the Guarantor's
accumulated adjustments account (as defined in the Code) as of the date the
Company or the Guarantor makes an initial public offering, if it should do so;
provided that such amount does not exceed the net proceeds
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from any such initial public offering and is made within one month prior to or
after such initial public offering.
No distributions shall be made pursuant to subparagraphs (A), (B) or (C)
of clause (iv) above (1) unless and until the Company and/or the Guarantor has
entered into a binding agreement with each shareholder requiring each
shareholder to refund to the Company and/or the Guarantor any amount distributed
thereby under clause (iv) that is later found to be in excess of the amount
permitted to the distributed thereunder and (2) if such a refund is in fact
required, that all refunds required actually have been received by the Company.
Not later than the date of making any Restricted Payment, the Company
and/or the Guarantor, as the case may be, shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by the covenants
contained in this Section 10.10 were computed, which calculations may be based
upon the Company's and/or the Guarantor's latest available financial statements.
SECTION 10.11. LIMITATION ON SALE OF ASSETS.
(a) The Company and the Guarantor will not, and will not permit any
respective Subsidiary thereof to, make any Asset Sales unless:
(i) the Company or the Guarantor (or their Subsidiaries, as the case
may be) receives consideration at the time of such sale or other
disposition at least equal to the fair market value thereof (as determined
in good faith by the Company's or the Guarantor's Board of Directors, as
the case may be, and evidenced by a resolution of such Board in the case
of any Asset Sales or series of related Asset Sales); and
(ii) the Net Available Proceeds received by the Company or the
Guarantor (or their respective Subsidiaries, as the case may be) from such
Asset Sale are applied in accordance with paragraph (b) or (c) hereof.
(b) The Company may, within three hundred sixty (360) days following the
receipt of Net Available Proceeds from any Asset Sale, apply such Net Available
Proceeds to: (i) the repayment of Indebtedness of the Company under the Bank
Credit Facility or other Senior Indebtedness of the Company, or Senior
Indebtedness of the Guarantor, provided that any such repayment shall result in
a permanent reduction in any revolving credit or other commitment relating
thereto equal to the principal amount so repaid; or (ii) make an investment in
capital assets used in the Principal Business.
(c) If, upon completion of the 360-day period, any portion of the Net
Available Proceeds of any Asset Sale shall not have been applied by the Company
as described in clauses 10.11(a)(i) or (ii) and such remaining Net Available
Proceeds, together with any remaining net cash proceeds from any prior Asset
Sale (such aggregate constituting "Excess Proceeds"), exceeds $1,000,000, then
the Company will be obligated to make an offer (the "Net Proceeds Offer") to
purchase Notes having an aggregate principal amount equal to the Excess Proceeds
(such purchase to be made on a pro rata basis if the amount available for such
repurchase is less than the principal amount of the Notes tendered in such Net
Proceeds Offer) at a purchase price of 100% of the principal amount thereof plus
accrued interest, if any, to the date of repurchase (the "Net Proceeds Payment
Date"). Upon the completion of Net Proceeds Offer, the amount of Excess Proceeds
will be reset to zero.
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(d) Notice of a Net Proceeds Offer to purchase the Notes will be made on
behalf of the Company not less than twenty-five (25) Business Days nor more than
sixty (60) Business Days before the Net Proceeds Payment Date. Notes tendered to
the Company pursuant to a Net Proceeds Offer will cease to accrue interest after
the Net Proceeds Payment Date. For purposes of this covenant, the term "Net
Proceeds Offer Amount" means the principal of Outstanding Notes in an aggregate
principal amount equal to any remaining Net Available Proceeds (rounded to the
next lowest $1,000). If the Net Proceeds Payment Date is on or after an interest
payment Record Date and on or before the related Interest Payment Date, any
accrued interest will be paid to the person in whose name a Note is registered
at the close of business on such Record Date, and no additional interest will be
payable to Holders who tender Notes pursuant to the Net Proceeds Offer, except
to the extent that less than the entire principal amount tendered thereby is
purchased by the Company. Any such Net Proceeds Offer shall comply with all
applicable provisions of federal and state laws regulating such offers,
including, but not limited to, Section 14(e) of the Exchange Act and Rule 14e-1
thereunder, and any provision of this Indenture which conflicts with such laws
shall be deemed to be suspended by the provisions of such laws.
(e) On the Net Proceeds Payment Date, the Company will (i) accept for
payment Notes or portions thereof pursuant to the Net Proceeds Offer in an
aggregate principal amount equal to the Net Proceeds Offer Amount or such lesser
amount of Notes as has been tendered, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all Notes or portions thereof so
tendered in an aggregate principal amount equal to the Net Proceeds Offer Amount
or such lesser amount of Notes as has been tendered and (iii) deliver, or cause
to be delivered to the Trustee, the Notes so accepted together with an Officers'
Certificate identifying the Notes or portions thereof tendered to and accepted
by the Company. If the aggregate principal amount of Notes tendered exceeds the
Net Proceeds Offer Amount, the Trustee will select the Notes to be purchased (in
integral multiples of $1,000) pro rata or by lot based on the principal amount
of Notes so tendered. The Paying Agent will promptly mail or deliver to Holders
so accepted payment in an amount equal to the purchase price, and the Company
will execute and the Trustee will promptly authenticate and mail or make
available for delivery to such Holders a new Note equal in principal amount to
any unpurchased portion of the Notes surrendered. Any Notes not so accepted will
be promptly mailed or delivered to the Holder thereof at the Company's expense.
For purposes of this Section, the Trustee will act as the Paying Agent.
(f) During the period between any Asset Sale and the application of the
Net Available Proceeds therefrom in accordance with this Section, all Net
Available Proceeds shall be maintained by the Company in a segregated account
and shall be invested in Permitted Financial Investments.
SECTION 10.12. LIMITATION ON LIENS SECURING INDEBTEDNESS.
The Company and the Guarantor will not, and will not permit any Subsidiary
thereof to, create, incur, assume or suffer to exist any Liens (other than
Permitted Liens) upon any of their respective properties securing (i) any
Indebtedness of the Company (other than Senior Indebtedness of the Company),
unless the Notes are equally and ratably secured or (ii) any Indebtedness of the
Guarantor (other than Senior Indebtedness of such Guarantor) unless the
Guarantee is equally and ratably secured; provided, however, that if such
Indebtedness is expressly subordinated to the Notes or the Guarantee, the Lien
securing such Indebtedness will be subordinated and junior to the Lien securing
the Notes or the Guarantee, with the same relative priority as such Subordinated
Indebtedness of the Company or the Guarantor will have with respect to the Notes
or the Guarantee, as the case may be, and provided further that the terms and
conditions of any Lien securing the Notes shall be acceptable to the Trustee.
The Trustee shall not be required to foreclose or realize on any Lien securing
the Notes if in the judgment
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of the Trustee, to do so would expose the Trustee to liability for which the
Trustee believes it would not be adequately indemnified.
SECTION 10.13. LIMITATION ON PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company and the Guarantor shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any 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 the Guarantor or a Subsidiary
of the Company or the Guarantor, (ii) pay any Indebtedness owed to the Company
or the Guarantor or a Subsidiary of the Company or the Guarantor; (iii) make
loans or advances to the Company or the Guarantor or a Subsidiary of the Company
or the Guarantor, except for such loans or advances in the ordinary course of
business and to the Company and to the Guarantor; or (iv) transfer any of its
properties or assets to the Company or the Guarantor or a Subsidiary of the
Company or the Guarantor (each, a "Payment Restriction"), except for (A)
encumbrances or restrictions with respect to Senior Indebtedness in effect on
the Issue Date; (B) consensual encumbrances or consensual restrictions binding
upon any Person at the time such Person becomes a Subsidiary of the Company or
the Guarantor (unless the agreement creating such consensual encumbrance or
consensual restrictions was entered into in connection with, or in contemplation
of, such entity becoming a Subsidiary); (C) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest of any
Subsidiary; (D) customary restrictions in security agreements or mortgages
securing Indebtedness of a Subsidiary to the extent such restrictions restrict
the transfer of the property subject to such security agreements and mortgages;
(E) customary restrictions in purchase money obligations for property acquired
in the ordinary course of business restricting the transfer of the property
acquired thereby; (F) consensual encumbrances or restrictions under any
agreement that refinances or replaces any agreement described in clauses (A),
(B), (C), (D) or (E) above, provided that the terms and conditions of any such
restrictions are no less favorable to the holders of the Notes than those under
the agreement so refinanced or replaced; and (G) customary non-assignment
provisions in leases, purchase money financings and any encumbrance or
restriction due to applicable law.
SECTION 10.14. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company and the Guarantor will not, and will not permit any of their
respective Subsidiaries to, directly or indirectly, (i) sell, lease, transfer or
otherwise dispose of any of its property, assets or securities to, (ii) purchase
or lease any property, assets or securities from, (iii) make any Investment in,
or (iv) enter into or amend any contract or agreement with or for the benefit
of, either (A) an Affiliate of any of them, (B) any Person or Persons who is a
member of a group (as such term is used for purposes of Sections 13(d) and 14(d)
of the Exchange Act, whether or not applicable) that, directly or indirectly, is
the beneficial holder or the Guarantor of 5% or more of any class of equity
securities of the Company, (C) any Person who is an Affiliate of any such
holder, or (D) any officers, directors, or employees of any of the above (each
case under (A), (B), (C) and (D), an "Affiliate Transaction"), unless such
Affiliate Transaction is pursuant to an employee incentive program customary in
the industry, is a transaction involving the sale or transfer of a completed
housing unit between the Company, the Guarantor and any of their respective
Subsidiaries or a joint venture partnership in which the Company, the Guarantor
or their respective Subsidiaries are a joint venture partner in a manner
consistent with customary business practice of homebuilders located in Arizona,
is "arm's length" or as a whole is on terms that are not less favorable to the
Company or the Guarantor, as the case may be, than those that could have been
obtained in a comparable transaction with a person that is not an Affiliate and
is approved by a majority of the Directors, and with respect to Affiliate
Transactions in one or a series of
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related transactions (to either party) in excess of $250,000 per Affiliate
Transaction, the Company will provide the Trustee with an Officers' Certificate
addressed and delivered to the Trustee stating that such Affiliate Transaction
has been approved by a majority of the Disinterested Directors and has been
approved by a majority of the Disinterested Directors and is made in good faith,
the terms of which are fair and reasonable to the Company or the Guarantor or
such Subsidiary, as the case may be, or, with respect to Affiliate Transactions
between the Company or the Guarantor and their respective Subsidiaries, to the
Company or the Guarantor and are at least as favorable as the terms which could
be obtained by the Company or such Subsidiary, as the case may be, or with
respect to Affiliate Transactions between the Company or the Guarantor and their
respective Subsidiaries by the Company or the Guarantor in a comparable
transaction made on an arm's length basis with Persons who are not affiliated
with the Company or the Guarantor or such Subsidiary and otherwise in compliance
with this Indenture; provided, that with respect to any Affiliate Transaction
with an aggregate value (to either party) in excess of $1,000,000, the Company
or the Guarantor, as the case may be, must, prior to the consummation thereof,
obtain a written favorable opinion as to the fairness of such transaction to
itself from a financial point of view from an independent investment banking
firm; provided, further, that the Company will not purchase or sell land from or
to an Affiliate except (a) as provided above, or (b) if the purchase or sale is
between MI and MHC at the same price originally paid by the selling party, or
(c) the sales price is based on fair market value supported by an independent
MAI appraisal.
SECTION 10.15. LIMITATION ON FUTURE SENIOR SUBORDINATED INDEBTEDNESS.
The Company and the Guarantor and their respective Subsidiaries shall not
incur any Indebtedness other than the Notes that is pari passu or subordinated
in right of payment to any other Indebtedness of the Company unless such
Indebtedness, by its terms, is subordinated to the Notes; provided, that if the
Indebtedness is for the purpose of refinancing the Notes, the Company and the
Guarantor and their respective Subsidiaries shall be permitted to incur
Indebtedness that is pari passu in right of payment to the Notes. The Guarantor
shall not incur any Indebtedness other than the Guarantee that is subordinated
in right of payment to any other Indebtedness of the Guarantor unless such
Indebtedness, by its terms, is pari passu or subordinated to the Guarantee.
Provided, however, that the Company and the Guarantor and their respective
Subsidiaries may issue up to $20,000,000 additional Indebtedness that ranks pari
passu with the Notes (provided that the Company and the Guarantor continues to
be in compliance with all covenants hereof and all applicable ratios referenced
herein upon such issuance applicable thereto) upon the occurrence of either of
the following events: (a) after completion of an initial public offering of the
Company of at least $5,000,000; or (b) on or after October 15, 1998, whichever
first occurs.
SECTION 10.16. CHANGE OF CONTROL.
(a) Within thirty (30) days following the occurrence of any Change of
Control, the Company shall offer (a "Change of Control Offer") to purchase all
outstanding Notes at a purchase price equal to 101% of the aggregate principal
amount of the Notes, plus accrued and unpaid interest to the date of purchase.
The Change of Control Offer shall be deemed to have commenced upon mailing of
the notice described in the next succeeding paragraph and shall terminate twenty
(20) Business Days after its commencement, unless a longer offering period is
then required by law. Promptly after the termination of the Change of Control
Offer (the "Change of Control Payment Date"), the Company shall purchase and
mail or deliver payment for all Notes tendered in response to the Change of
Control Offer. If the Change of Control Payment Date is on or after an interest
payment record date and on or before the related interest payment date, any
accrued interest will be paid to the Person in whose name a Note is registered
at the close of business on such record date, and no additional interest will be
payable to Holders who tender Notes pursuant to the Change of Control Offer.
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(b) Within thirty (30) days after any Change of Control, the Company (with
notice to the Trustee), or the Trustee at the Company's request, will mail or
cause to be mailed to all Holders on the date of the Change of Control a notice
(the "Change of Control Notice") of the occurrence of such Change of Control and
of the Holders' rights arising as a result thereof. The Change of Control Notice
will contain all instructions and materials necessary to enable Holders to
tender their Notes to the Company. The Change of Control Notice, which shall
govern the terms of the Change of Control Offer, shall state: (1) that the
Change of Control Offer is being made pursuant to this Section ; (2) the
purchase price and the Change of Control Payment Date; (3) that any Note not
tendered will continue to accrue interest; (4) that any Note accepted for
payment pursuant to the Change of Control Offer shall cease to accrue interest
on the Change of Control Payment Date; (5) that Holders electing to have a Note
purchased pursuant to any Change of Control Offer will be required to surrender
the Note, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Company, a depositary, if appointed by the
Company, or a Paying Agent at the address specified in the notice prior to
termination of the Change of Control Offer; (6) that Holders will be entitled to
withdraw their election if the Company, depositary or Paying Agent, as the case
may be, receives, not later than the expiration of the Change of Control Offer,
or such longer period as may be required by law, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Xxxxxx is withdrawing his election to have the Note purchased; and (7) that
Holders whose Notes are purchased only in part will be issued Notes equal in
principal amount to the unpurchased portion of the Notes surrendered.
(c) On the Change of Control Payment Date, the Company shall, and with
respect to clause (ii) below, the Company and/or the Guarantor shall, (i) accept
for payment Notes or portions thereof tendered pursuant to the Change of Control
Notice, (ii) if the Company appoints a depository or Paying Agent, deposit with
such depository or Paying Agent money sufficient to pay the purchase price of
all Notes or portions thereof so tendered and (iii) deliver to the Trustee the
Notes so accepted together with an Officers' Certificate identifying the Notes
or portions thereof tendered to and accepted by the Company. The depository, the
Company or the Paying Agent, as the case may be, shall promptly mail to the
Holder of Notes so accepted payment in an amount equal to the purchase price,
and the Trustee shall promptly authenticate and mail to such Holders a new Note
equal in principal amount to any unpurchased portion of the Note surrendered.
For purposes of this Section, the Trustee shall act as the Paying Agent.
(d) The Company, to the extent applicable and if required by law, will
comply with Section 14 of the Exchange Act and the provisions of Regulation 14E
and any other tender offer rules under the Exchange Act and any other federal
and state securities laws, rules and regulations which may then be applicable to
any offer by the Company to purchase the Notes at the option of the Holders upon
a Change of Control.
SECTION 10.17. MAINTENANCE OF CONSOLIDATED TANGIBLE NET WORTH
If the Company's and the Guarantor's Consolidated Tangible Net Worth at
the end of each of any two consecutive fiscal quarters (the last day of the
second such fiscal quarter being referred to as a "Deficiency Date") is less
than $1,500,000 (the "Minimum Consolidated Net Worth"), then the Company shall,
no later than sixty (60) days after a Deficiency Date (or one hundred twenty
(120) days if a Deficiency Date is also the end of the Company's fiscal year),
offer to purchase (a "Net Worth Offer") Notes in a principal amount equal to 10%
of the principal amount of Notes originally issued under this Indenture (or such
lesser amount as may be outstanding at the time the Net Worth Offer is made)
(the "Net Worth Offer Amount") at a purchase price equal to 100% of the
aggregate principal amount of such
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Notes, plus accrued and unpaid interest to the purchase date (the "Net Worth
Purchase Price"). The Net Worth Offer shall remain open for a period of twenty
(20) Business Days following its commencement and no longer, unless a longer
period is required by law (the "Net Worth Offer Period"). Three (3) business
days after the termination of the Net Worth Offer Period (the "Net Worth Payment
Date"), the Company shall purchase and the Paying Agent shall mail or deliver
payment for the Net Worth Offer Amount of Notes tendered, pro rated over such
tendered Notes to the nearest $1,000 principal amount, or, if less than the Net
Worth Offer Amount has been tendered, all Notes tendered in response to the Net
Worth Offer. In no event shall the Company's failure to meet the Minimum
Consolidated Tangible Net Worth at the end of any fiscal quarter require the
making of more than one Net Worth Offer. The principal amount of Notes to be
purchased pursuant to a Net Worth Offer may be reduced by the principal amount
of Notes acquired by the Company subsequent to the Deficiency Date and
surrendered to the Trustee for cancellation through purchase or redemption
(other than pursuant to a Change of Control Offer).
Notice of a Net Worth Offer shall be mailed by the Company to all Holders
at their last registered address upon the commencement of the Net Worth Offer.
The Net Worth Offer shall remain open from the time of mailing until three
Business Days before the Net Worth Payment Date. The notice shall contain all
instructions and material necessary to enable such Holders to tender Notes
pursuant to a Net Worth Offer. The notice, which (to the extent consistent with
this Indenture) shall govern the terms of a Net Worth Offer, shall state: (1)
that the Net Worth is being made pursuant to this Section 10.17; (2) the Net
Worth Offer Amount, the Net Worth Purchase Price (including the amount of
accrued and unpaid interest) and the Net Worth Payment Date; (3) that any Note
not tendered or accepted for payment and for which payment is made pursuant to
the Net Worth Purchase Offer shall cease to accrue interest on and after the Net
Worth Payment Date; (5) that Holders electing to have a Note purchased pursuant
to a Net Worth Purchase Offer will be required to surrender the Security, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent (which may not for purposes of this
Section 10.17, notwithstanding anything in this Indenture to the contrary, be
the Company or any Affiliate of the Company) at the address specified in the
notice on or before the Net Worth Purchase Date; (6) that Holders will be
entitled to withdraw their election if the Paying Agent receives, not later than
three Business Days prior to the Net Worth Purchase Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Notes the Holder delivered for purchase and a statement
that such Xxxxxx is withdrawing his election to have the Note purchased; (7)
that if Notes in a principal amount in excess of the Net Worth Offer Amount are
tendered pursuant to the Net Worth Purchase Offer, the Company shall purchase
Notes on a pro rata basis (with such adjustments as may be deemed appropriate by
the Company so that only Notes in denominations of $1,000 or integral multiples
of $1,000 shall be acquired); and (8) that Holders whose Notes were purchased
only in part will be issued new Notes of the same series equal in principal
amount to the unpurchased portion of the Notes surrendered.
Any such Net Worth Purchase Offer shall comply with all applicable
provisions of federal and state laws regulating such offers, including but not
limited to Section 14(e) of the Exchange Act and Rule 14e-1 thereunder, and any
provisions of this Indenture which conflict with such laws shall be deemed to be
superseded by the provisions of such laws.
No later than the Net Worth Payment Date, the Company (and/or the
Guarantor with respect to (ii)) shall (i) accept for payment Notes or portions
thereof tendered pursuant to the Net Worth Purchase Offer (on a pro rata basis
if required pursuant to clause (7) above), (ii) deposit with the Paying Agent
U.S. legal tender sufficient to pay the purchase price of all Notes or portions
thereof so accepted together with the Officers' Certificate stating the Notes or
portions thereof accepted for payment by the Company.
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The Company shall execute and Trustee shall promptly authenticate and mail or
deliver to such Holders a new Note equal in principal amount to any unpurchased
portion of the Note surrendered. Any Notes not so accepted shall be mailed
promptly or delivered by the Paying Agent to the Holder thereof. The Company
will notify the Holders of the results of the Net Worth Purchase Offer
promptly after the Net Worth Payment Date.
In addition to the foregoing provisions, in the event that the Company's
and the Guarantor's Consolidated Tangible Net Worth at the end of each of two
consecutive fiscal quarters is less than $2,000,000, the annual rate of interest
on the Notes shall be increased by one percent (1%) from the annual rate of
interest the Notes then bear, which adjusted rate of interest shall remain in
effect from the Deficiency Date until the end of the fiscal year in which the
Company's and the Guarantor's Consolidated Tangible Net Worth is equal to or
exceeds $2,000,000. In the event that the Company's and the Guarantor's
Consolidated Tangible Net Worth at the end of each of two consecutive fiscal
quarters is less than the Minimum Consolidated Net Worth, the annual rate of
interest on the Notes shall be increased by four percent (4%) from the annual
rate of interest the Notes then bear unless the annual interest rate has already
been and remains increased by one percent (1%) in accordance with the
immediately preceding sentence, in which case the annual rate of interest shall
be increased by three percent (3%) from the annual rate of interest the Notes
then bear, such adjusted rate of interest in either situation remaining in
effect from the Deficiency Date until the end of the fiscal year in which the
Company's and the Guarantor's Consolidated Tangible Net Worth exceeds the
Minimum Consolidated Net Worth.
SECTION 10.18 ELECTION OF OUTSIDE DIRECTORS.
No later than one hundred and eighty (180) days subsequent to the Issue
Date ("Election Period"), the Company and the Guarantor shall use their best
efforts to elect to each of their respective Boards of Directors two (2)
additional Persons who are not employees of the Company or the Guarantor, any
Subsidiaries of either the Company or the Guarantor or any Affiliate of the
Company, the Guarantor or any Subsidiary thereof ("Outside Directors"). Such
Outside Directors shall serve until the next annual meetings of the stockholders
of the Company and the Guarantor held subsequent to their election or until
their successors have been duly elected and qualified. In the event that the
Company and the Guarantor have not elected two Outside Directors at the
expiration of the Election Period set forth above, the annual interest rate on
the Notes shall be increased by one and one-half percent (1.5%) from the annual
rate of interest the Notes then bear, which adjusted rate of interest shall
remain in effect from the first day subsequent to the Election Period until the
date that both the Company and the Guarantor have elected two (2) Outside
Directors to their respective Boards of Directors; provided, however, in the
event that both the Company and the Guarantor have not elected two (2) Outside
Directors upon the expiration of thirty (30) days after the expiration of the
Election Period, the adjusted annual rate of interest on the Notes shall be
increased an additional one tenth of one percent (.1%), which adjusted annual
interest rate shall be further increased an additional one tenth of one percent
(.1%) for each additional thirty (30) days that both the Company and the
Guarantor have not elected two (2) Outside Directors to their respective Boards
of Directors.
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ARTICLE 11
Subordination of Notes
SECTION 11.1. NOTES SUBORDINATED TO SENIOR INDEBTEDNESS.
The Company, for itself and its successors, and each Holder, by its
acceptance of Notes, agrees that the payment of the principal of and interest on
the Notes is subordinated, to the extent and in the manner provided in this
Article, to the prior payment in full of all Senior Indebtedness of the Company
(hereinafter in this Article referred to as "Senior Indebtedness").
This Article shall constitute a continuing offer of all Persons who, in
reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and any one or
more of them may enforce such provisions.
SECTION 11.2. NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES.
Upon the Maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, unless and until all principal thereof, premium, if
any, interest thereon and other amounts due thereon shall first be paid in full,
no payment shall be made by or on behalf of the Company with respect to the
principal of, premium, if any, or interest on the Notes.
Upon the maturity of any Senior Indebtedness of the Company by lapse of
time, acceleration or otherwise, unless and until all principal thereof,
premium, if any, and interest thereon and other amounts due thereon shall first
be paid in full, no payment shall be made by or on behalf of the Company with
respect to the principal of, premium, if any, or interest on the Notes. Upon the
happening of any default in the payment of any principal of or interest on or
other amounts due on any Senior Indebtedness of the Company ("Payment Default"),
then, unless and until such default shall have been cured or waived or have
ceased to exist, no payment shall be made by or on behalf of the Company with
respect to the principal of premium, if any, or interest on the Notes. Upon the
happening of any default or event of default (other than a Payment Default)
(including any event which with the giving of notice or the lapse of time or
both would become an event of default and including any default or event of
default which would result upon any payment with respect to the Notes) with
respect to any Senior Indebtedness of the Company, as such default or event of
default is defined therein or in the instrument or agreement or other document
under which it is outstanding, then upon written notice thereof given to the
Company and the Trustee which specifies the particular provision of the
Indenture by a holder or holders of any Senior Indebtedness of the Company or
their Representative ("Payment Notice") and for the period of 179 days following
the delivery of such Payment Notice ("Payment Blockage Period") unless and until
such event of default has been cured or waived or has ceased to exist or the
Trustee receives notice from the holder or holders of the relevant Senior
Indebtedness (or a representative) terminating the payment blockage period
during the Payment Blockage Period, then (i) no payment of or with respect to
the principal of or interest on the Notes (including any payment or distribution
that may be payable or deliverable to holders of the Notes by reason of the
payment of any other debt of the Company subordinated to the payment of the
Notes) shall be made directly or indirectly by or on behalf of the Company and
(ii) no direct or indirect payment shall be made by or on behalf of the Company
with respect to any repurchase, redemption or other retirement of any of the
Notes for cash or property or otherwise. At the expiration of such Payment
Blockage Period, the Company shall, subject to the existence of certain
conditions,
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promptly pay to the Trustee all sums due and not paid during such Payment
Blockage Period as a result thereof. Only one such Blockage Period may be
commenced within any 360 consecutive days. For purposes of such provision, no
event of default which existed or was continuing, on the date such Payment
Blockage Period commenced shall be or be made the basis for the commencement of
any subsequent Payment Blockage Period by the holder or holders of such Senior
Indebtedness (or a representative of such holder or holders) unless such event
of default is cured or waived or has ceased to exist for a period of not less
than 90 consecutive days.
In furtherance of the provisions of the first Section of this Article, in
the event that, notwithstanding the foregoing provisions of this Section, any
payment with respect to the principal of or interest on the Notes shall be made
by or on behalf of the Company, and received by the Trustee, by any Holder or by
any Paying Agent (or, if the Company is acting as its own Paying Agent, money
for any such payment shall be segregated and held in trust), at a time when such
payment was prohibited by the provisions of this Section, then, unless and
until such payment is no longer prohibited by this Section, such payment
(subject to the provisions of Sections 11.6 and 11.7) shall be received and held
in trust by the Trustee or such Holder or Paying Agent for the benefit of and
shall be immediately paid over to the holders of Senior Indebtedness or their
Representative, ratably according to the aggregate amounts remaining unpaid on
account of the principal of and interest on the Senior Indebtedness held or
represented by each, for application to the payment of all Senior Indebtedness
in accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of Senior Indebtedness.
The provisions of this Section shall not modify or limit in any way the
application of the following Section.
The Company shall give prompt written notice to the Trustee of any default
in the payment of any Senior Indebtedness or any acceleration under any Senior
Indebtedness or under any agreement pursuant to which Senior Indebtedness may
have been issued. Without limiting the effect of Section 11.6 hereof, failure to
give such notice shall not affect the subordination of the Notes to the Senior
Indebtedness or the application of the other provisions provided in this
Article.
SECTION 11.3. NOTES SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR
INDEBTEDNESS ON DISSOLUTION, LIQUIDATION OR REORGANIZATION
OF THE COMPANY.
In the event of any Insolvency or Liquidation Proceeding with respect to
the Company, all amounts payable in respect of any Senior Indebtedness shall
first be paid in full before the Holders are entitled to receive any direct or
indirect payment or distribution of any cash, property or securities on account
of principal of or interest on the Notes or any other payment with respect to
the Notes.
The holders of Senior Indebtedness shall be entitled to receive directly,
for application to the payment of Senior Indebtedness (to the extent necessary
to pay in full all Senior Indebtedness, whether or not due, including
specifically, without limitation, all Post-Commencement Interest, whether or not
allowed as a claim in such Insolvency or Liquidation Proceeding, after giving
effect to any substantially concurrent payment or distribution to the holders of
Senior Indebtedness on account of Senior Indebtedness), any payment or
distribution of any kind or character, whether in cash, property or securities,
including any payment or distribution which may be payable or deliverable by
reason of the payment of any other Indebtedness of the Company being
subordinated to the payment of the Notes which may be payable or deliverable in
respect of the Notes in any such Insolvency or Liquidation Proceeding.
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In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or any Paying Agent or the Holder of any Note shall have
received any payment from or distribution of assets of the Company or the estate
created by the commencement of any such Insolvency or Liquidation Proceeding, of
any kind or character in respect of the Notes, whether in cash, property or
securities, including any payment or distribution which may be payable or
deliverable by reasons of the payment of any other Indebtedness of the Company
being subordinated to the payment of the Notes, before all Senior Indebtedness
(whether or not due including specifically, without limitation, all
Post-Commencement Interest, whether or not allowed as a claim in such Insolvency
or Liquidation Proceeding) is paid in full, then and in such event such payment
or distribution shall be received and held in trust by the Trustee, any such
Paying Agent or Holder for and shall be paid over to the holders of Senior
Indebtedness (to the extent necessary to pay in full all such Senior
Indebtedness, whether or not due, including specifically, without limitation,
all Post-Commencement Interest thereon, whether or not allowed as a claim in
such Insolvency or Liquidation Proceeding), after giving effect to any
substantially concurrent payment or distribution to the holders of Senior
Indebtedness on account of Senior Indebtedness, for application to the payment
in full of such Senior Indebtedness.
The Company shall give prompt written notice to the Trustee of any
Insolvency or Liquidation Proceeding with respect to it.
SECTION 11.4. HOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS.
After all amounts payable under or in respect of Senior Indebtedness
(whether or not due) are paid in full, the Holders shall be subrogated (without
any duty on the part of the holders of Senior Indebtedness to warrant, create,
effectuate, preserve or protect such subrogation), to the extent of the payments
or distributions made to the holders of Senior Indebtedness pursuant to the
provisions of this Article (equally and ratably with the holders of all other
Indebtedness of the Company which by its express terms is subordinate and
subject in right of payment to Senior Indebtedness to substantially the same
extent as the Notes are so subordinate and subject in right of payment and which
is entitled to like rights and subrogation), to the rights of the holders of
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness, until the principal of and
interest on the Notes shall be paid in full. For the purpose of such subrogation
no such payments or distributions to the holders of Senior Indebtedness by or on
behalf of the Company, or by or on behalf of the Holders by virtue of this
Article, which otherwise would have been made to the Holders shall, as between
the Company and the Holders, be deemed to be payment by the Company to or on
account of the Senior Indebtedness, it being understood that the provisions of
this Article are and are intended solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of Senior
Indebtedness, on the other hand.
SECTION 11.5. OBLIGATIONS OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article or elsewhere in this Indenture or in any
Note is intended to or shall impair, by and among the Company, the Guarantor and
any Subsidiary Guarantor and the Holders, the obligations of the Company and the
Guarantor and any Subsidiary Guarantor, which are absolute and unconditional, to
pay to the Holders the principal of and interest on the Notes as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Holders and creditors of the
Company, other than the holders of the Senior Indebtedness, nor shall anything
herein or therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture, subject
to the rights, if any, under this Article, of the holders of Senior Indebtedness
in respect of cash, property or securities of the Company
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received upon the exercise of any such remedy. Upon any distribution of assets
of the Company referred to in this Article, the Trustee, subject to the
provisions of Section 6.1, and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
Insolvency or Liquidation Proceeding is pending, or a certificate of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.
SECTION 11.6. TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN
ABSENCE OF NOTICE.
The Trustee or any Paying Agent (other than the Company) shall not at any
time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee or such Paying Agent
unless and until the Trustee or any Paying Agent shall have received written
notice thereof from the Company or from one or more holders of Senior
Indebtedness or from any Representative therefor and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Section 6.1,
shall be entitled in all respects conclusively to assume that no such fact
exists. Nothing in this Section is intended to or shall relieve any Holder from
the obligations imposed under Sections 11.2 and 11.3 with respect to money or
other distributions received in violation of the provisions thereof.
SECTION 11.7. APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT.
All money and U.S. Government Obligations deposited in trust with the
Trustee pursuant to and in accordance with Section 4.1 shall be for the sole
benefit of the Holders and shall not be subject to this Article. Otherwise, any
deposit of assets by the Company with the Trustee or any Paying Agent (whether
or not in trust) for the payment of principal of or interest on any Notes shall
be subject to the provisions of this Article provided that, if prior to the
second Business Day preceding the date on which by the terms of this Indenture
any such assets may become distributable for any purpose (including without
limitation, the payment of either principal of or interest on any Note) the
Trustee or such Paying Agent shall not have received with respect to such assets
the written notice provided for in Section 11.6, then the Trustee or such Paying
Agent shall have full power and authority to receive such assets and to apply
the same to the purpose for which they were received, and shall not be affected
by any notice to the contrary which may be received by it on or after such date.
The preceding sentence shall be construed solely for the benefit of the Trustee
and each Paying Agent and shall not otherwise affect the rights of holders of
Senior Indebtedness.
SECTION 11.8. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
THE COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS.
No right of any present or future holder of any Senior Indebtedness to
enforce the subordination provisions in this Article shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act by any such holder, or by any
noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.
The holders of Senior Indebtedness may extend, renew, modify or amend the terms
of the Senior Indebtedness or any security therefor and release, sell or
exchange such security and otherwise deal freely with the Company, all without
affecting the liabilities and obligations of the parties to this Indenture or
the Holders.
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SECTION 11.9. HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
NOTES.
Each Holder of Notes by his acceptance thereof (i) authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and to protect the rights of the Holders pursuant to this Indenture, and
(ii) appoints the Trustee his attorney-in-fact for such purpose, including in
the event of any Insolvency or Liquidation Proceeding with respect to the
Company, the timely filing of a claim for the unpaid balance of his Notes in the
form required in said proceeding and the causing of such claim to be approved.
If the Trustee shall not file a proper claim or proof of debt in the form
required in such proceeding prior to 30 days before the expiration of the time
to file such claim or claims, then the holders of the Senior Indebtedness or
their Representative shall have the right to file an appropriate claim for and
on behalf of the Holders. Nothing herein contained shall be deemed to authorize
the Trustee or any holder of Senior Indebtedness or their Representative to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee or any holder of Senior
Indebtedness or their Representative to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 11.10. RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all of the rights set forth in this
Article in respect of any Senior Indebtedness at any time held by it to the same
extent as any other holder of Senior Indebtedness, and nothing in this Indenture
shall be construed to deprive the Trustee of any of its rights as such holder.
SECTION 11.11. ARTICLE 11 NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment of principal of or interest on the Notes by
reason of any provision of this Article shall not be construed as preventing the
occurrence of a Default or an Event of Default.
SECTION 11.12. PAYMENT.
A payment with respect to a Note or with respect to principal of or
interest on a Note shall include, without limitation, payment of principal of
(and premium, if any) and interest on any Note, any depositing of funds under
Article 4, any payment on account of any mandatory or optional repurchase or
redemption of any Note (including payments pursuant to Section 10.11, Section
10.16 or Section 10.17) and any payment or recovery on any claim (whether for
rescission or damages and whether based on contract, tort, duty imposed by law,
or any other theory of liability) relating to or arising out of the offer, sale
or purchase of any Note, provided that any such payment, deposit, other payment
or recovery (i) not prohibited pursuant to this Article at the time actually
made shall not be subject to any recovery by any holder of Senior Indebtedness
or Representative therefor or other Person pursuant to this Article at any time
thereafter and (ii) made by or from any person other than the Company shall not
be subject to any recovery by any holder of Senior Indebtedness or
Representative therefor or other Person pursuant to this Article at any time
thereafter except to the extent such Person recovers any such amount paid from
the Company, whether pursuant to rights of indemnity, rescission or otherwise.
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ARTICLE 12
Redemption of Notes
SECTION 12.1. RIGHT OF REDEMPTION AND REDEMPTION PRICES.
(a) The Notes may be redeemed in the manner, on the dates and at the
redemption prices specified in this Section .
(b) The Notes may be redeemed at the option of the Company, in whole
or in part (in any integral multiple of $1,000), at any time on or after October
15, 1998, upon notice as set forth in Section 12.2, at the following redemption
prices (expressed as percentages of the principal amount), together with accrued
and unpaid interest to and including the date fixed for redemption, if redeemed
during the 12-month period beginning October 15 of the following years:
Years Redemption Price
----- ----------------
1998 106.500%
1999 103.250%
2000 and thereafter 100.0%
(c) In addition, the Notes may be redeemed at the option of the
Company upon completion by the Company of an initial public offering in excess
of $10.0 million at a purchase price equal to 100% of the principal amount to be
redeemed, plus the interest rate the Notes then bear, together with accrued and
unpaid interest to and including the dated fixed for redemption upon notice as
set forth in Section 12.2; provided, however, the Company cannot redeem Notes
aggregating more than 25% of the outstanding principal balance of the Notes
pursuant to the provisions hereof.
SECTION 12.2. NOTICE OF REDEMPTION; PARTIAL REDEMPTION.
In case the Company shall desire to exercise such right to redeem all, or,
as the case may be, any part of the Notes in accordance with the foregoing
rights, it shall fix a date for redemption and shall mail or cause to be mailed
a notice of such redemption at least thirty (30) and not more than sixty (60)
days prior to the date fixed for redemption to the Holders of Notes to be
redeemed as a whole or in part at their last addresses as the same appear on the
books of transfer agent. Such mailing shall be by first class mail. Notice, if
mailed in the manner herein provided, shall be conclusively presumed to have
been duly given, whether or not the Holder receives such notice. In any case,
failure to give such notice by mail or any defect in the notice to the Holder of
any Note selected for redemption in whole or in part shall not affect the
validity of the proceeding for the redemption of any other Note or portion
thereof.
Each such notice of redemption shall specify the date fixed for redemption
and the redemption price at which Notes are to be redeemed, and shall state that
payment of the redemption price of the Notes to be redeemed, together with
accrued interest to the date fixed for redemption, will be made at the office or
agency to be maintained by the Company in accordance with this Indenture (or, if
desired by the Company, at the Corporate Trust Office of the Trustee), upon
presentation and surrender of such Notes and that from and after such date
interest thereon will cease to accrue. If less than all the Notes are to be
redeemed, the notice shall specify the particular Notes to be redeemed in whole
or in part. In case any Note is to be redeemed in part only, the notice shall
state the portion of the principal amount
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thereof to be redeemed, and that on and after the redemption date, upon
surrender of any such Note, a new Note or Notes in principal amount equal to the
unredeemed portion of such Note will be issued.
The Trustee, upon the written request of the Company delivered to the
Trustee at least 15 days prior to the last permissible date on which notice of
redemption must be given (or such shorter period as shall be acceptable to the
Trustee) shall, for and on behalf of and in the name of the Company, give notice
of the redemption of Notes as hereinabove provided (whether or not the Trustee
shall hold at the time of the giving of such notice sufficient cash to effect
such redemption).
If less than all the Notes are to be redeemed, the Company shall give to
the Trustee at least 60 days' notice (or such shorter notice as may be
acceptable to the Trustee) in advance of the redemption date as to the aggregate
principal amount of Notes to be redeemed, and the Trustee shall select by lot,
or in such other manner as, in its discretion, it shall deem appropriate and
fair, the Notes or portions thereof to be redeemed. In making such selection,
the Trustee may provide for selection of Notes of denominations of less than
$1,000 only as a whole.
SECTION 12.3. PAYMENT OF NOTES CALLED FOR REDEMPTION.
If the giving of notice of redemption shall have been completed as above
provided, the Notes or portions of Notes specified in such notice shall become
due and payable on the date and at the place stated in such notice at the
applicable redemption price, together with interest accrued to the date fixed
for redemption, and on and after such date of redemption (unless the Company
shall make default in the payment of such Notes at the redemption price,
together with interest accrued thereon to the date fixed for redemption)
interest on the Notes or portions of Notes so called for redemption shall cease
to accrue, and such Notes and portions of Notes shall be deemed not to be
outstanding hereunder and shall not be entitled to any benefit under this
Indenture except to receive payment of the redemption price, together with
accrued interest to the date fixed for redemption. On presentation and surrender
of such Notes at said place of payment in said notice specified, such Notes or
specified portions thereof shall be paid and redeemed by the Company at the
applicable redemption price, together with interest accrued thereon to the date
fixed for redemption.
Upon presentation of any Note which is redeemed in part only, the Company
shall execute and the Trustee shall authenticate and deliver to the holder
thereof, at the expense of the Company, a new Note or Notes of authorized
denominations in principal amount equal to the unredeemed portion of the Note so
presented.
SECTION 12.4. REDEMPTION MONEYS TO BE DEPOSITED WITH TRUSTEE OR PAYING
AGENTS.
At least one Business Day prior to the date fixed for the redemption of
any Notes as hereinbefore provided in this Article, the Company and/or the
Guarantor or any Subsidiary Guarantor shall deposit in trust with the Trustee,
or at its option with any Paying Agent, cash sufficient to redeem the Notes to
be redeemed on such date, at the redemption price, together with interest
accrued to the date fixed for redemption.
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ARTICLE 13
Guarantee
SECTION 13.1. UNCONDITIONAL GUARANTEE.
Each Subsidiary Guarantor and the Guarantor hereby, jointly and severally,
unconditionally guarantees (such guarantee to be referred as the "Guarantee") to
each Holder and to the Trustee, irrespective of the validity and enforceability
of this Indenture, the Notes or the obligations of the Company, the Guarantor
or Subsidiary Guarantor, if any, under this Indenture, the due and punctual
payment of the principal of, premium, if any, and interest on the Notes and
all other amounts due and payable under this Indenture and the Notes by the
Company whether at maturity, by acceleration, redemption, repurchase or
otherwise, including, without limitation, interest on the overdue principal of,
premium, if any, and interest on the Notes, to the extent lawful, all in
accordance with the terms hereof and thereof; subject, however, to the
limitations set forth in Section 13.4.
Failing payment when due of any amount so guaranteed for whatever reason,
the Guarantor will be obligated to pay the same immediately. Each Subsidiary
Guarantor and the Guarantor hereby agrees that its obligations hereunder shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Subsidiary
Guarantor and the Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that this Guarantee
will not be discharged except by complete performance of the obligations
contained in the Notes, this Indenture and in this Guarantee. If any Holder or
the Trustee is required by any court or otherwise to return to the Company, any
Subsidiary Guarantor and the Guarantor, or any custodian, trustee, liquidator or
other similar official acting in relation to the Company or any Subsidiary
Guarantor and the Guarantor, any amount paid by the Company or any Subsidiary
Guarantor and the Guarantor to the Trustee or such Holder, this Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary Guarantor and the Guarantor agrees it shall not be entitled to
any right of subrogation in relation to the Holders in respect of any
obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Subsidiary Guarantor and the Guarantor further agrees
that, as between each Subsidiary Guarantor and the Guarantor, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 5 for
the purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such obligations
as provided in Article 5, such obligations (whether or not due and payable)
shall forthwith become due and payable by each Subsidiary Guarantor and the
Guarantor for the purpose of this Guarantee.
Failing payment of the Guarantee, for whatever reason, the Company will be
obligated to pay, or to perform, or cause the performance of, the same
immediately. The Company hereby agrees that its obligation on the Notes shall be
full, unconditional and absolute, irrespective of the validity, regularity or
enforceability of the Notes, the Guarantee or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of the Notes
with respect to any provisions hereof or thereof,
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the recovery or any judgment against the Company or any Subsidiary Guarantor and
the Guarantor, any action to enforce the same or any other circumstance which
might otherwise constitute a legal or equitable discharge or defense of the
Company.
The Guarantee of each Subsidiary Guarantor and the Guarantor and the
obligations of the Company herein shall be, in the manner and to the extent set
forth in Article 14, subordinated in right of payment to the prior payment when
due of the principal of, premium, if any, and accrued and unpaid interest on all
existing and future Senior Indebtedness of any Subsidiary Guarantor and the
Guarantor and of the Company, as the case may be, and senior to the right of
payment of principal of, premium, if any, and accrued and unpaid interest on all
existing and future Subordinated Indebtedness of any Subsidiary Guarantor and
the Guarantor and of the Company, as the case may be.
SECTION 13.2. GUARANTOR MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Except as set forth in Articles 4 and 5, nothing contained in this
Indenture or in any of the Notes shall prevent any consolidation or merger of
any Guarantor with or into the Company or any other Guarantor or shall prevent
any sale or conveyance of all or substantially all of its assets, to the Company
or any other Guarantor.
(b) The Company may not sell the Capital Stock of a Subsidiary Guarantor,
or the Guarantor and a Subsidiary Guarantor or the Guarantor may not consolidate
with or merge into or sell all or substantially all of its assets (in a single
transaction or series of related transactions) to any Person other than the
Company or a Subsidiary Guarantor (whether or not affiliated with the Company or
the Guarantor), unless (i) with respect to a consolidation or merger of such
Subsidiary Guarantor or the Guarantor, either (A)(1) the surviving corporation
is a Subsidiary of the Company or, as a result of the transaction, becomes a
Subsidiary of the Company, (2) immediately after giving effect to such
transaction on a pro forma basis, the Consolidated Tangible Net Worth of the
surviving entity is equal to or greater than the Consolidated Tangible Net Worth
of the Guarantor or the Subsidiary Guarantor, as the case may be, immediately
before such transaction, (3) immediately after giving effect to such transaction
on a pro forma basis, the Company would be able to incur at least $1.00 of
additional Indebtedness under the test described in Section 10.9(a), (4) if the
surviving corporation is not the Guarantor or the Subsidiary Guarantor, the
surviving corporation agrees to assume such Guarantor's or Subsidiary
Guarantor's Guarantee and all its obligations pursuant to this Indenture, and
(5) such transaction does not (x) violate any covenant in Sections 10.1 to
10.17 or (y) result in a Default or an Event of Default immediately thereafter
that is continuing or (B)(1) such transaction is made in accordance with the
covenant in Section 10.11 and (2) such transaction does not (x) violate any
provision of Sections 8.1 to 8.3 or any other covenant in Sections 10.1 to
10.17 or (y) result in a Default or Event of Default immediately thereafter
that is continuing and (ii) with respect to the sale of the Capital Stock or
all or substantially all of the assets of such Guarantor or Subsidiary
Guarantor, (A) such transaction is made in accordance with the covenant in
Section 10.11 and (B) such transaction does not (x) violate any provision of
Sections 8.1 to 8.3 or any covenants under the Indenture or (y) result in a
Default or Event of Default immediately thereafter that is continuing. In the
case of any such consolidation, merger, sale or conveyance involving the
assumption by the successor corporation of a Guarantor's or Subsidiary
Guarantor's obligations under the Indenture, such successor shall assume such
obligations by supplemental indenture executed and delivered to the Trustee
and satisfactory in form to the Trustee and shall assume the due and punctual
performance of all the covenants and conditions of this Indenture to be
performed by the Guarantor or the Subsidiary Guarantor. Upon execution and
delivery of such supplemental indenture, such successor corporation shall
succeed to and be substituted for the Guarantor or the Subsidiary Guarantor
with the same effect as if it had been named herein as a Guarantor or a
Subsidiary Guarantor. The Guarantor or
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Subsidiary Guarantor shall deliver to the Trustee an Officer's Certificate and
an Opinion of Counsel, each stating that such merger, consolidation, sale or
transfer and such supplemental indenture comply with this Section 13.2 and all
conditions precedent herein provided relative to such transaction have been
complied with.
SECTION 13.3. RELEASE OF THE GUARANTOR OR A SUBSIDIARY GUARANTOR.
By undertaking all of the actions required in compliance with the terms of
this Indenture, including but not limited to the provisions of Section 13.2(b),
the Guarantor or a Subsidiary Guarantor, if any, shall be deemed released from
all of its Guarantee and related obligations in this Indenture. The Trustee
shall deliver an appropriate instrument evidencing such release upon receipt of
a request by the Company accompanied by an Officers' Certificate and an Opinion
of Counsel certifying that all conditions specified in this Indenture for such
release have been satisfied in accordance with the provisions of this Indenture.
Any Guarantor or Subsidiary Guarantor not so released remains liable for the
full amount of principal of and interest on the Notes as provided in this
Article.
SECTION 13.4. LIMITATION GUARANTOR'S LIABILITY.
The Guarantor and each Subsidiary Guarantor and by its acceptance hereof
each Holder hereby confirms that it is the intention of all such parties that
the Guarantee by Guarantor pursuant to its Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any federal or state law. To effectuate
the foregoing intention, the Holders and each Guarantor hereby irrevocably
agrees that the obligations of each Guarantor under the Guarantee shall be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor and after giving effect to
any collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 13.5, result in the obligations of such Guarantor under the
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal, state or foreign law.
SECTION 13.5. CONTRIBUTION.
In order to provide for just and equitable contribution by the Guarantor
and each Subsidiary Guarantor, each Guarantor agrees, inter se, that in the
event any payment or distribution is made by a Guarantor (a "Funding Guarantor")
under the Guarantee, such Funding Guarantor shall be entitled to a contribution
from each other Guarantor in a pro rata amount based on the adjusted Net Assets
of each Guarantor (including the Funding Guarantor) for all payments, damages
and expenses incurred by the Funding Guarantor in discharging the Company's
obligations with respect to the Notes or any other Guarantor's obligations with
respect to the Guarantee; provided, however, that the liability of each
Guarantor under the Guarantee shall not be limited in any manner by the
foregoing.
SECTION 13.6. EXECUTION AND DELIVERY.
To further evidence the Guarantee set forth in Section 13.1, each
Guarantor hereby agrees that a notation relating to such Guarantee, in
substantially the form of Exhibit A-1, shall be endorsed on each Note
authenticated and delivered by the Trustee and executed by either manual or
facsimile signature of two Officers of each Guarantor.
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Each Subsidiary Guarantor and the Guarantor hereby agrees that its
Guarantee set forth in Section 13.1 shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation relating to such
Guarantee.
If an Officer of a Guarantor whose signature is on this Indenture or a
Note no longer holds that office at the time the Trustee authenticates such Note
or at any time thereafter, such Guarantor's Guarantee of such Note shall be
valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of any Guarantee set forth in this
Indenture on behalf of a Guarantor.
SECTION 13.7. SEVERABILITY.
In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, that portion of such provision that is not invalid. illegal or
unenforceable shall remain in effect, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
ARTICLE 14
Subordination of Guarantee
SECTION 14.1. GUARANTEE SUBORDINATED TO SENIOR INDEBTEDNESS.
Each Guarantor or Subsidiary Guarantor, for itself and its successors, and
each Holder, by his acceptance of Notes, agrees that the Guarantee of each such
Guarantor is subordinated, to the extent and in the manner provided in this
Article, to the prior payment in full of all Senior Indebtedness of that
Guarantor (hereinafter in this Article referred to as "Senior Indebtedness").
This Article shall constitute a continuing offer of all Persons who, in
reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and any one or
more of them may enforce such provisions.
SECTION 14.2. NO PAYMENT ON GUARANTEE IN CERTAIN CIRCUMSTANCES.
Upon the Maturity of any Senior Indebtedness by lapse of time,
acceleration or otherwise, unless and until all principal thereof, interest
thereon and other amounts due thereon shall first be paid in full, no payment
shall be made by or on behalf of any Guarantor pursuant to the Guarantee with
respect to the principal of or interest on the Notes.
Upon the happening of any default in the payment of any principal of or
interest on or other amounts due on any Senior Indebtedness (a "Payment
Default"), then, unless and until such default shall have been cured or waived
or shall have ceased to exist, no payment shall be made by or on behalf of any
Guarantor pursuant to the Guarantee with respect to the principal of or interest
on the Notes.
Upon the happening of any default or event of default (other than a
Payment Default) (including any event which with the giving of notice or the
lapse of time or both would become an event of default
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and including any default or event of default which would result upon any
payment pursuant to the Guarantee with respect to the Notes) with respect to any
Senior Indebtedness of such Guarantor, as such default or event of default is
defined therein or in the instrument or agreement or other document under which
it is outstanding, then upon written notice thereof given to any Guarantor and
the Trustee by a holder or holders of any Senior Indebtedness or their
Representative ("Payment Notice"), no payment shall be made by or on behalf of a
Guarantor pursuant to the Guarantee with respect to the principal of, premium,
if any, or interest on the Notes, during the period (the "Payment Blockage
Period") commencing on the date of such receipt of such Payment Notice and
ending on the earlier of (i) the date, if any, on which such default is cured or
waived or ceases to exist or (ii) the date, if any, on which the Senior
Indebtedness to which such default relates is discharged; provided, however,
that no default or event of default (other than a Payment Default) shall prevent
the making of any payment for more than 179 days after the Payment Notice shall
have been given. Notwithstanding the foregoing, (i) not more than one Payment
Notice shall be given within a period of 360 consecutive days, and (ii) no event
of default which existed or was continuing on the date of any Payment Notice
shall be made the basis for the giving of a subsequent Payment Notice unless all
such events of default shall have been cured or waived for a period of at least
180 consecutive days after such date, and (iii) if any Guarantor or the Trustee
receives any Payment Notice, a similar notice relating to or arising out of the
same default or facts giving rise to such default (whether or not such default
is on the same issue of Senior Indebtedness) shall not be effective for purposes
of this.paragraph.
In furtherance of the provisions of Section 14.1, in the event that,
notwithstanding the foregoing provisions of this Section, any payment with
respect to the principal of or interest on the Notes shall be made by or on
behalf of any Guarantor, and received by the Trustee, by any Holder or by any
Paying Agent (or, if the Company is acting as its own Paying Agent, money for
any such payment shall be segregated and held in trust), at a time when such
payment was prohibited by the provisions of this Section, then, unless and
until such payment is no longer prohibited by this Section, such payment
(subject to the provisions of Sections 14.6 and 14.7) shall be received and held
in trust by the Trustee or such Holder or Paying Agent for the benefit of and
shall be immediately paid over to the holders of Senior Indebtedness or their
Representative, ratably according to the aggregate amounts remaining unpaid on
account of the principal of and interest on the Senior Indebtedness held or
represented by each, for application to the payment of all Senior Indebtedness
in accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of Senior Indebtedness.
The provisions of this Section shall not modify or limit in any way the
application of Section 14.3.
Each Guarantor shall give prompt written notice to the Trustee of any
default in the payment of any Senior Indebtedness of such Guarantor or any
acceleration under any such Senior Indebtedness or under any agreement pursuant
to which such Senior Indebtedness may have been issued. Without limiting the
effect of Section 14.6 hereof, failure to give such notice shall not affect the
subordination of the Guarantee to the Senior Indebtedness or the application of
the other provisions provided in this Article.
SECTION 14.3. GUARANTEE SUBORDINATED TO PRIOR PAYMENT OF ALL SENIOR
INDEBTEDNESS ON DISSOLUTION, LIQUIDATION OR REORGANIZATION
OF A GUARANTOR.
In the event of any Insolvency or Liquidation Proceeding with respect to
any Guarantor, all amounts payable in respect of any Senior Indebtedness of such
Guarantor shall first be paid in full before the Holders are entitled to receive
any direct or indirect payment or distribution of any cash, property
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or securities pursuant to the Guarantee on account of principal of or interest
on the Notes or any other payment with respect to the Notes.
The holders of Senior Indebtedness shall be entitled to receive directly,
for application to the payment of Senior Indebtedness (to the extent necessary
to pay in full all Senior Indebtedness, whether or not due) any payment or
distribution of any kind or character, (whether in cash, property or securities,
including any payment or distribution which may be payable or deliverable by
reason of the payment of any other indebtedness of such Guarantor being
subordinated to the payment of the Guarantee) which may be payable or
deliverable in respect of the Guarantee in any such Insolvency or Liquidation
Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or any Paying Agent or the Holder of any Note shall have
received any payment from or distribution of assets of a Guarantor or the estate
created by the commencement of any such Insolvency or Liquidation Proceeding, of
any kind or character in respect of the Guarantee, whether in cash, property or
securities, including any payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of such Guarantor
being subordinated to the payment of the Guarantee, before all Senior
Indebtedness (whether or not due) is paid in full, then and in such event such
payment or distribution shall be received and held in trust by the Trustee, any
such Paying Agent or Holder for and shall be paid over to the holders of Senior
Indebtedness (to the extent necessary to pay in full all such Senior
Indebtedness, whether or not due) after giving effect to any substantially
concurrent payment or distribution to the holders of Senior Indebtedness on
account of Senior Indebtedness, for application to the payment in full of such
Senior Indebtedness.
The Company and each Subsidiary Guarantor and the Guarantor shall give
prompt written notice to the Trustee of any Insolvency or Liquidation Proceeding
with respect to any such Guarantor.
SECTION 14.4. HOLDERS TO BE SUBROGATED TO RIGHTS OF HOLDERS OF SENIOR
INDEBTEDNESS.
After all amounts payable under or in respect of Senior Indebtedness
(whether or not due) are paid in full, the Holders shall be subrogated (without
any duty on the part of the holders of Senior Indebtedness to warrant, create,
effectuate, preserve or protect such subrogation), to the extent of the payment
or distributions made to the holders of Senior Indebtedness pursuant to the
provisions of this Article (equally and ratably with the holders of all other
indebtedness of any Guarantor which by its express terms is subordinate and
subject in right of payment to Senior Indebtedness to substantially the same
extent as the Guarantee are so subordinated and subject in right of payment and
which is entitled to like rights and subrogation), to the rights of the holders
of Senior Indebtedness to receive payments and distributions of cash, property
and securities applicable to the Senior Indebtedness, until the principal of and
interest on the Notes shall be paid in full. For the purpose of such subrogation
no such payments or distributions to the holders of Senior Indebtedness by or on
behalf of the Company, or by or on behalf of the Holders by virtue of this
Article, which otherwise would have been made to the Holders shall, as between
any Guarantor and the Holders, be deemed to be payment by any Guarantor to or on
account of the Senior Indebtedness, it being understood that the provisions of
this Article are and are intended solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of Senior
Indebtedness, on the other hand.
SECTION 14.5. GUARANTEE UNCONDITIONAL.
Nothing contained in this Article or elsewhere in this Indenture or in any
Guarantee is intended to or shall impair, as between any Guarantor and the
Holders, the Guarantee, which is absolute and
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unconditional, as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of the
Holders and creditors of a Guarantor, other than the holders of the Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article,
of the holders of Senior Indebtedness in respect of cash, property or securities
of any Guarantor received upon the exercise of any such remedy. Upon any
distribution of assets of any Guarantor referred to in this Article, the
Trustee, subject to the provisions of Section 6.1, and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such Insolvency or Liquidation Proceedings is pending, or
a certificate of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Senior Indebtedness and other indebtedness of such Guarantor, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article.
SECTION 14.6. TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN
ABSENCE OF NOTICE.
The Trustee or any Paying Agent (other than the Company) shall not at any
time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee or such Paying Agent
unless and until the Trustee or any Paying Agent shall have received written
notice thereof from the Company or a Guarantor or from one or more holders of
Senior Indebtedness or from any Representative therefor and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 6.1, shall be entitled in all respects conclusively to assume that no
such fact exists. Nothing in this Section is intended to or shall relieve any
Holder from the obligations imposed under Sections 14.2 and 14.3 with respect to
money or other distributions received in violation of the provisions thereof.
SECTION 14.7. APPLICATION BY TRUSTEE OF ASSETS DEPOSITED WITH IT.
All money and U.S. Government Obligations deposited in trust with the
Trustee pursuant to and in accordance with Section 4.1 shall be for the sole
benefit of the Holders and shall not be subject to this Article. Otherwise, any
deposit of assets by any Guarantor pursuant to the Guarantee with the Trustee or
any Paying Agent (whether or not in trust) for the payment of principal of or
interest on any Notes shall be subject to the provisions of this Article;
provided that, if prior to the second Business Day preceding the date on which
by the terms of this Indenture any such assets may become distributable for any
purpose (including without limitation, the payment of either principal of or
interest on any Note) the Trustee or such Paying Agent shall not have received
with respect to such assets the written notice provided for in Section 14.6,
then the Trustee or such Paying Agent shall have full power and authority to
receive such assets and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such date. The preceding sentence shall be construed
solely for the benefit of the Trustee and each Paying Agent and shall not
otherwise affect the rights of holders of Senior Indebtedness.
SECTION 14.8. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
GUARANTORS OR HOLDERS OF SENIOR INDEBTEDNESS.
No right of any present or future holder of any Senior Indebtedness to
enforce the subordination provisions in this Article shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of any
Guarantor or by any act or failure to act by any such holder, or by any
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noncompliance by the Company with the terms of this Indenture, regardless of any
knowledge thereof which any such holder may have or be otherwise charged with.
The holders of Senior Indebtedness may extend, renew, modify or amend the terms
of the Senior Indebtedness or any security therefor and release, sell or
exchange such security and otherwise deal freely with any Guarantor, all without
affecting the liabilities and obligations of the parties to this Indenture or
the Holders.
SECTION 14.9. HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF
NOTES.
Each Holder of Notes by his acceptance thereof (i) authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and to protect the rights of the Holders pursuant to this Indenture, and
(ii) appoints the Trustee his attorney-in-fact for such purpose, including in
the event of any Insolvency or Liquidation Proceeding with respect to any
Guarantor, the timely filing of a claim of the unpaid balance of his Notes
pursuant to Guarantee in the form required in said proceeding and the causing of
such claim to be approved. If the Trustee shall not file a proper claim or proof
of debt in the form required in such proceeding prior to thirty (30) days before
the expiration of the time to file such claim or claims, then the holders of the
Senior Indebtedness or their Representative shall have the right to file an
appropriate claim for and on behalf of the Holders. Nothing herein contained
shall be deemed to authorize the Trustee or any Holder of Senior Indebtedness or
their Representative to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes, the Guarantee or the rights of any Holder, or to authorize
the Trustee or any holder of Senior Indebtedness or their Representative to vote
in respect of the claim of any Holder in any such proceeding.
SECTION 14.10. RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all of the rights set forth in this
Article in respect of any Senior Indebtedness at any time held by it to the same
extent as any other holder of Senior Indebtedness, and nothing in this Indenture
shall be construed to deprive the Trustee of any of its rights as such holder.
SECTION 14.11. PAYMENT.
A payment pursuant to the Guarantee with respect to a Note or with respect
to principal of or interest on a Note shall include, without limitation, payment
of principal of (and premium, if any) and interest on any Note, any depositing
of funds under Article 10, any payment on account of any mandatory or optional
repurchase or redemption of any Note (including payments pursuant to Section
10.11, Section 10.16 or 10.17) and any payment or recovery on any claim (whether
for rescission or damages and whether based on contract, tort, duty imposed by
law, or any other theory of liability) relating to or arising out of the offer,
sale or purchase of any Note, provided that any such payment, deposit, other
payment or recovery (i) not prohibited pursuant to this Article at the time
actually made shall not be subject to any recovery by any holder of Senior
Indebtedness or Representative therefor or other Person pursuant to this Article
at any time thereafter and (ii) made by or from any Persons other than any
Guarantor shall not be subject to any recovery by any holder of Senior
Indebtedness or Representative therefor or other Person pursuant to this Article
at any time thereafter except to the extent such Person recovers any such amount
paid from any such Guarantor whether pursuant to rights of indemnity, rescission
or otherwise.
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SECTION 14.12. ARTICLE 14 NOT TO PREVENT EVENTS OF DEFAULT.
The failure of any Guarantor to make a payment by reason of any provision
of this Article 14 shall not be construed as preventing the occurrence of a
Default or Event of Default under Section 5.1 or in any way preventing the
Holders from exercising any rights hereunder, other than the right to receive
payment in respect of the Guarantee
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
MONTEREY MANAGEMENT, INC., an Arizona
corporation
By /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx, President
BANK ONE, ARIZONA, NA,
as Trustee
By /s/ X X Xxxxxxxx
--------------------------------
Vice President
GUARANTOR:
MONTEREY HOMES CORPORATION, an Arizona
corporation
By /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxx, President
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STATE OF ARIZONA )
)ss.
County of Maricopa )
On this 14th day of October, 1994, before me, a Notary Public in and for
said county and state, personally appeared XXXXXXX X. XXXXXXXX to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the President of MONTEREY MANAGEMENT, INC., one of the
corporations described in and which executed the foregoing instrument; that said
instrument was signed on behalf of said corporation by authority of its Board of
Directors; and he acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
14th day of October,1994.
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Notary Public exp 5-2-98
(Seal)
STATE OF ARIZONA )
)ss.
County of MARICOPA )
On this 17th day of October, 1994, before me, a Notary Public in and for
said county and state, personally appeared X X Xxxxxxxx to me personally known
and known to me to be the same person who executed the within and foregoing
instrument, who, being by me duly sworn, did depose, acknowledge and say: That
he/she is a Trust Officer of BANK ONE, ARIZONA, NA, one of the corporations
described in and which executed the foregoing instrument; that said instrument
was signed and sealed on behalf of said corporation by authority of its Board of
Directors; and he/she acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
17th day of October, 1994.
/s/ Xxxxxx Xxxxxxxxx
----------------------------------------------------
Notary Public My Commission Expires May 31, 1998
(Seal)
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84
STATE OF ARIZONA )
)ss.
County of Maricopa )
On this 14th day of October, 1994, before me, a Notary Public in and for
said county and state, personally appeared XXXXXXX X. XXXXXXXX to me personally
known and known to me to be the same person who executed the within and
foregoing instrument, who, being by me duly sworn, did depose, acknowledge and
say that he is the President of MONTEREY HOMES CORPORATION, one of the
corporations described in and which executed the foregoing instrument; that said
instrument was signed on behalf of said corporation by authority of its Board of
Directors; and he acknowledged the execution of said instrument to be the
voluntary act and deed of said corporation by it voluntarily executed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal this
14th day of October, 1994.
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Notary Public
(Seal)
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FIRST SUPPLEMENTAL INDENTURE, dated as of September 9, 1996, among
MONTEREY MANAGEMENT, INC., an Arizona corporation (the "Company"), having its
principal office at 0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx
00000, MONTEREY HOMES CORPORATION, an Arizona corporation (the "Guarantor")
having its principal office at 0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000, Monterey Management-Tucson, Inc., an Arizona
corporation, having its principal office at 0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxx 00000, Monterey Homes-Tucson Corporation, an Arizona
corporation, having its principal office of 0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx
000 Xxxxxxxxxx, Xxxxxxx 00000, and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee (the "Trustee"), having its principal Corporate Trust Office at
Norwest Center, Sixth and Marquette, Minneapolis, Minnesota 55479-0069,
supplementing that certain Indenture, dated as of October 17, 1994 (as amended
and supplemented from time to time, the "Indenture") between the Company, the
Guarantor, and the Trustee.
RECITALS OF THE COMPANY
The Company has heretofore executed and delivered to the Trustee the
Indenture providing for the issuance of up to $8,000,000 in aggregate principal
amount of its 13% Senior Subordinated Notes due 2001 (the "Notes").
Section 9.2 of the Indenture permits a supplemental indenture to the
Indenture to be entered into with the consent of the Holders of not less than a
majority in principal amount of the Outstanding Notes for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of modifying in any manner the rights of the Holders under
the Indenture, and the requisite consent of Holders of the Notes has been
obtained for this First Supplemental Indenture.
The Company, pursuant to the foregoing authority, proposes in and by
this First Supplemental Indenture to modify the terms of the Indenture as
provided herein.
All things necessary to make this First Supplemental Indenture a
valid agreement of the Company, the Guarantor, and the Trustee, and a valid
supplement to the Indenture, in accordance with its terms, have been done.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the agreements set
forth in this First Supplemental Indenture and intending to be legally bound
hereby, it is mutually agreed, for the equal and proportionate benefit of all
Holders of the Notes as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. Definitions.
(a) For all purposes of this First Supplemental Indenture, except as
otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as
the singular;
86
(2) capitalized terms used herein without definition shall
have the meanings specified in the Indenture;
(3) unless the context otherwise requires, any reference to an
"Article" or a "Section " refers to an Article or a Section , as the
case may be, of the Indenture; and
(4) the words "herein," "hereof" and "hereunder" and other
words or similar import refer to this First Supplemental Indenture
as a whole and not to any particular Article, Section , or
subdivision.
(b) For all purposes of the Indenture and this First Supplemental
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:
"Homeplex" means Homeplex Mortgage Investments Corporation, a
Maryland corporation.
"Homeplex Merger" means any transaction by which either (i)
the Company and the Guarantor merge with and into Homeplex or (ii)
the Company and the Guarantor become wholly-owned subsidiaries of
Homeplex. The Homeplex Merger shall be deemed to constitute an
initial public offering of the Company for all purposes of this
Indenture, except that the Homeplex Merger shall not be deemed to
constitute an initial public offering under Section 12.1 of the
Indenture or the form of the Note in Section 2.4 of the Indenture to
the extent relating to redemption of the Notes. For purposes of
Section 10.15, the Homeplex Merger will be deemed to constitute an
initial public offering of the Company of at least $5,000,000.
"Intercompany Mergers" means the merger of MMI into MM-TI,
with MM-TI surviving, and the merger of MHC into XX-XX, with XX-XX
surviving.
"MHC" means Monterey Homes Corporation, as Arizona
corporation.
"XX-XX" means Monterey Homes-Tucson Corporation, an Arizona
corporation.
"MMI" means Monterey Management, Inc., an Arizona corporation.
"MM-TI" means Monterey Management-Tucson, Inc., an Arizona
corporation.
"Monterey Stockholders" means Xxxxxxx X. Xxxxxxxx and Xxxxxx
X. Xxxxxx.
"Newco 1" means the corporation to which MM-TI will transfer
or contribute all of its assets and its liabilities and obligations,
including its liabilities and obligations under the Notes and the
Indenture, pursuant to the Subsidiary Drop Downs.
"Newco 2" means the corporation to which XX-XX will transfer
or contribute all of its assets and its liabilities and obligations,
including its liabilities and obligations under the Notes and the
Indenture, pursuant to the Subsidiary Drop Downs.
"Subsidiary Drop Downs" means (i) the transfer or contribution
by MM-TI of all of its assets and its liabilities and obligations,
including its liabilities and obligations under the Notes and the
Indenture, to a newly formed, wholly-owned subsidiary (Newco 1) and
(ii)
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the transfer or contribution by XX-XX of all of its assets and its
liabilities and obligations, including its liabilities and
obligations under the Notes and the Indenture, to a newly formed,
wholly-owned subsidiary (Newco 2).
ARTICLE TWO
Amendments
Section 201. Amendments to Indenture.
(a) Section 1.1 of the Indenture is hereby amended as follows:
(i) The definition of the term "Company" is hereby amended by
adding the following at the end of such definition:
MM-TI will be deemed to be the Company for all purposes of the
Indenture following the Intercompany Mergers and Newco 1 will
be deemed to be the Company for all purposes of the Indenture
following the Subsidiary Drop Downs.
(ii) The definition of the term "Guarantor" is hereby amended
to read in its entirety as follows:
"Guarantor" means each of (i) MHC; (ii) XX-XX; (iii) Homeplex,
but only at such time as (a) the Homeplex Merger has taken
place and (b) Homeplex has executed and delivered to the
Trustee an Acceptance substantially in the form attached
hereto as Supplement A; (iv) Newco 2, following the Subsidiary
Drop Downs; and (v) any entity that shall have become a
successor corporation pursuant to the applicable provisions of
this Indenture or that becomes a guarantor of the Notes in
compliance with the provisions of Article 13 hereof,
including, but not limited to, any Subsidiary Guarantor. Each
reference herein to the Guarantor shall mean each and all of
such Guarantors. If Homeplex shall become a Guarantor under
the Indenture, all covenants and tests in the Indenture will
thereupon apply to Homeplex but no retroactive application of
such covenants and tests will be required from the date of
issuance of the Notes to the date that Homeplex shall become a
Guarantor.
(iii) The definition of the term "Permitted Company
Refinancing Indebtedness" is hereby amended as follows:
(A) by adding the phrase "or Guarantor" after the phrase
"Permitted Company" in the first and twelfth lines thereof;
and
(B) by adding the phrase "or the Guarantor" after the
phrase "Indebtedness of the Company" in the first and in the
second to third line thereof.
(b) Section 10.2 of the Indenture is amended by adding a new
paragraph (d) at the end of Section 10.2 to read in its entirety as
follows:
(d) Notwithstanding anything to the contrary in this Section
10.2, after the effective date of the Homeplex Merger,
if Homeplex shall have also
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executed and delivered to the Trustee the Acceptance in
the form attached hereto as Supplement A and for so long
as Homeplex is subject to the requirements of Section 13
or 15(d) of the Exchange Act, then the Company shall be
deemed to have satisfied its obligations under this
Section 10.2 if Homeplex makes the requisite filings and
mailings hereunder of copies of annual and quarterly
reports and other reports and information that it files
with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act or furnishes to its stockholders
pursuant to the Exchange Act.
(c) Section 10.9 of the Indenture is amended by:
(i) inserting the word "Tangible" after the word
"Consolidated" in the ninth line of subsection (a) thereof;
(ii) inserting the phrase "or Guarantor" after the phrase
"Permitted Company" in the second line of subsection (b) thereof;
(iii) inserting the phrase "or the Guarantor" in each of the
following places:
(A) after the phrase "(ii) the Company" in the second
line of subsection (b) thereof;
(B) after the phrase "(iv) the Company" in the third
line of subsection (b) thereof;
(C) after the phrase "solely to the Company" in the
fourth line of subsection (b) thereof;
(D) after the phrase "Owned Subsidiary of the Company"
in the fifth line of subsection (b) thereof;
(E) after the word "Company" in the ninth line of
subsection (b) thereof; and
(F) replacing the word "received" in the ninth line of
subsection (b) thereof with the word "made."
(d) Section 10.10 of the Indenture is amended by:
(i) inserting the phrase "(other than any Restricted Payments
made pursuant to any of subparagraphs (A), (B) or (C) of clause (iv)
of subsection (b) below)" after the phrase "Issue Date" in the
second line of clause (iii) of subsection (a) thereof;
(ii) adding the phrase "and the Guarantor" after the phrase
"taxable years of the Company" in the first line of subparagraph (B)
of clause (iv) of subsection (b) thereof; and
(iii) adding the phrase "and the Guarantor's" after the phrase
"allocable to the Company's" in the third line of subparagraph (B)
of clause (iv) of subsection (b) thereof.
(e) Section 10.11 of the Indenture in hereby amended by:
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89
(i) adding the phrase "or the Guarantor (or their Subsidiary),
as the case may be," after the phrase "the Company" in the first and
third lines of subsection (b) thereof; and
(ii) deleting the words "by the Company" in the second line of
subsection (c) thereof.
(f) Section 10.13 of the Indenture is amended by inserting the
phrase "(other than the Company to the extent it is a Subsidiary of a
Guarantor and other than a Guarantor to the extent it is a Subsidiary of
the Company or another Guarantor)" after the phrase "restriction on the
ability of any Subsidiary" in the third line thereof.
(g) Section 10.14 of the Indenture is amended by:
(i) inserting the phrase "(other than Permitted Business
Investments)" after the phrase "make any Investment" in the third
line thereof.
(ii) inserting the phrase "(w)" before the words "is pursuant
to an employee incentive program "in the tenth line thereof;
(iii) inserting the phrase "(x)" before the words "is a
transaction involving the sale or transfer of a completed housing
unit" in the tenth and eleventh lines thereof;
(iv) inserting the phrase "(y)" before the words "is arm's
length" in the fourteenth line thereof; and
(v) inserting the phrase "(z)" before the words "as a whole"
in the fourteenth line thereof.
(h) Section 10.15 of the Indenture is amended by deleting the words
"pari passu or" in the second line thereof.
(i) Section 10.16 of the Indenture is amended by:
(i) adding the phrase "Except as provided in subsection (e)
below," at the beginning of subsection (c) thereof; and
(ii) adding a new subsection (e) thereto to read in its
entirety as follows:
(e) Notwithstanding anything to the contrary in this
Section 10.16, in the event that the Monterey Stockholders
deliver a binding commitment to the Trustee to purchase Notes
that are tendered to the Company for payment in connection
with a Change of Control resulting from the Homeplex Merger,
the Monterey Stockholders shall purchase all of the Notes
tendered in response to a Change of Control Offer given as a
result of the Homeplex Merger in the amount that would
otherwise be payable by the Company under this Section 10.16
on the Change of Control Payment Date to pay such Notes (the
"Purchase Price"). Each Monterey Stockholder will pay his
prorated portion of the Purchase Price to the depository or
Paying Agent not later than the Business Day prior to the
Change of Control Payment Date. On the Change of Control
Purchase Date, the Company will utilize such monies to
purchase tendered Notes on behalf of the Monterey
Stockholders, and, as soon as practicable thereafter, the
Company will
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execute and the Trustee will authenticate and deliver to the
Monterey Stockholders one or more new Notes with a principal
amount equal to the principal amount of the Notes so
purchased. Notes purchased by the Monterey Stockholders
pursuant to this Section 10.16(e) will thereafter remain
outstanding under this Indenture.
(j) A new Section 10.19 is added to the Indenture to read in its
entirety as follows:
Section 10.19. Homeplex Offer to Purchase Notes
(a) If the Homeplex Merger shall have occurred, Homeplex will
make an offer (the "Purchase Offer") to purchase all
outstanding Notes at a purchase price equal to 101% of the
aggregate principal amount of the Notes, plus accrued and
unpaid interest to the date of purchase, such purchase to
occur no later than eighteen (18) months following the
effective date of the Homeplex Merger (the "Purchase Offer
Payment Date"). The Purchase Offer shall be deemed to have
commenced upon mailing of the notice described in the next
succeeding paragraph and shall terminate twenty (20) Business
Days after its commencement, unless a longer offering period
is then required by law. On the Purchase Offer Payment Date,
Homeplex shall purchase and mail or deliver payment for all
Notes tendered in response to the Purchase Offer. If the
Purchase Offer Payment Date is on or after an interest payment
record date and on or before the related interest payment
date, any accrued interest will be paid to the Person in whose
name a Note is registered at the close of business on such
record date, and no additional interest will be payable to
Holders who tender Notes pursuant to the Purchase Offer.
(b) Not later than thirty (30) Business Days preceding the
Purchase Offer Payment Date, Homeplex (with notice to the
Trustee), or the Trustee at Homeplex's request, will mail or
cause to be mailed to all Holders of record of the Notes on
the most recent practicable date prior to such mailing, a
notice (the "Purchase Offer Notice"), containing all
instructions and materials necessary to enable Holders to
tender their Notes to Homeplex. The Purchase Offer Notice,
which shall govern the terms of the Purchase Offer, shall
state: (1) that the Purchase Offer is being made pursuant to
this Section ; (2) the purchase price and the Purchase Offer
Payment Date; (3) that any Note not tendered will continue to
accrue interest; (4) that any Note accepted for payment
pursuant to the Purchase Offer shall cease to accrue interest
payable to the tendering Holder on the Purchase Offer Payment
Date; (5) that Holders electing to have a Note purchased
pursuant to the Purchase Offer will be required to surrender
the Note, with the form entitled "Option of Holder to Elect
Purchase" (to be attached to such Purchase Offer Notice)
completed, to the Company, a depositary, if appointed by the
Company, or a Paying Agent at the address specified in the
notice prior to termination of the Purchase Offer; (6) that
Holders will be entitled to withdraw their election if the
Company, depository or Paying Agent, as the case may be,
receives, not later than the expiration of the Purchase Offer,
or such longer period as may be required by law, a telegram,
telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Xxxxxx is
withdrawing his election to have the Note purchased; and (7)
that Holders whose Notes are
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91
purchased only in part will be issued Notes equal in principal
amount to the unpurchased portion of the Notes surrendered.
(c) On the Purchase Offer Payment Date, Homeplex shall (i)
accept for purchase Notes or portions thereof tendered
pursuant to the Purchase Offer, (ii) deposit with the
depository or Paying Agent, money sufficient to pay the
purchase price of all Notes or portions thereof so tendered
and (iii) deliver to the Trustee the Notes so accepted
together with an Officers' Certificate identifying the Notes
or portions thereof tendered to and accepted by Homeplex. The
depository, the Company or the Paying Agent, as the case may
be, shall promptly mail to the Holder of Notes so accepted
payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail to such Holders a
new Note equal in principal amount to any unpurchased portion
of the Note surrendered. For purposes of this Section , the
Trustee shall act as the Paying Agent.
(d) Homeplex, to the extent applicable and if required by law,
will comply with Section 14 of the Exchange Act and the
provisions of Regulation 14E and any other tender offer rules
under the Exchange Act and other federal and state securities
laws, rules and regulations which may then be applicable to
any offer by Homeplex to purchase the Notes at the option of
the Holders hereunder.
(e) Notwithstanding anything to the contrary in this Section
10.19, Notes purchased by Homeplex pursuant to this Section
10.19 will thereafter remain outstanding under the Indenture.
(k) Section 13.2 of the Indenture is hereby amended as follows:
(i) by deleting the phrases "or the Guarantor," "the Guarantor
or," "Guarantor's or," and "Guarantor or" wherever such terms
appear in the first, second, fifth to sixth, ninth, twelfth,
thirteenth, twentieth, twenty-fourth, twenty-seventh, twenty-
ninth, and thirtieth lines thereof;
(ii) by deleting the phrase ", as the case may be," in the
ninth to tenth lines thereof;
(iii) by inserting the phrase ", the Guarantor," after the
phrase "than the Company" in the fourth line thereof; and
(iv) by inserting the phrase "or the Guarantor" after the
phrase "a Subsidiary of the Company" in the sixth and seventh
lines thereof.
(l) Section 13.3 of the Indenture is hereby amended by deleting the
phrase, "the Guarantor or" in the second line and the phrase "Guarantor
or" in the seventh line thereof.
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ARTICLE THREE
Miscellaneous
Section 301. Miscellaneous.
(a) The Trustee accepts the trusts created by the Indenture,
as supplemented by this First Supplemental Indenture, and agrees to
perform the same upon the terms and conditions of the Indenture, as
supplemented hereby.
(b) The recitals contained herein shall be taken as statements
of the Company and the Guarantor, and the Trustee assumes no
responsibility for their correctness.
(c) Each of the Company, the Guarantor and the Trustee makes
and reaffirms as of the date of execution of this First Supplemental
Indenture all of its respective representations, covenants and
agreements set forth in the Indenture as supplemented hereby.
(d) All covenants and agreements in this First Supplemental
Indenture by the Company, the Guarantor or the Trustee shall bind
its respective successors and assigns, whether so expressed or not.
(e) Except as otherwise provided herein, the Indenture shall
remain in full force and effect in accordance with its terms.
(f) This First Supplemental Indenture shall be deemed to be
incorporated in, and made a part of, the Indenture, and the
Indenture, as supplemented hereby, shall be read, taken and
construed as one and the same instrument.
(g) Nothing in this First Supplemental Indenture, express or
implied, shall give to any Person, other than the parties hereto and
their successors hereunder and the Holders, any benefit or any legal
or equitable right, remedy or claim under this First Supplemental
Indenture.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, all as of the day and year first above written.
(SEAL) MONTEREY MANAGEMENT, INC.
By /s/ Xxxxx X. Xxxx
-------------------------------
Name: Xxxxx X. Xxxx
Title: CFO
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(SEAL) MONTEREY HOMES CORPORATION
By /s/ Xxxxx X. Xxxx
------------------------------
Name: Xxxxx X. Xxxx
Title: CFO
(SEAL) MONTEREY MANAGEMENT-TUCSON, INC.
By /s/ Xxxxx X. Xxxx
-------------------------------
Name: Xxxxx X. Xxxx
Title: CFO
(SEAL) MONTEREY HOMES-TUCSON CORPORATION
By /s/ Xxxxx X. Xxxx
-------------------------------
Name: Xxxxx X. Xxxx
Title: CFO
(SEAL) NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President
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94
STATE OF ARIZONA )
)ss.
County of Maricopa )
On the 10 day of September, 1996, before me personally came
Xxxxx X. Xxxx, to me known, who, being by me duly sworn, did depose and
say that he is the CFO of Monterey Management, Inc., one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
/s/ Xxxx X. Xxxxxx
--------------------------------
Notary Public
My commission expires:
June 30, 1998
----------------------
[seal]
STATE OF ARIZONA )
)ss.
County of Maricopa )
On the 10 day of September, 1996, before me personally came
Xxxxx X. Xxxx, to me known, who, being by me duly sworn, did depose and
say that he is the CFO of Monterey Homes Corporation, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
/s/ Xxxx X. Xxxxxx
---------------------------------
Notary Public
My commission expires:
June 30, 1998 [seal]
---------------------------
- 10 -
95
STATE OF ARIZONA )
)ss.
County of Maricopa )
On the 10 day of September, 1996, before me personally came
Xxxxx X. Xxxx, to me known, who, being by me duly sworn, did depose and
say that he is the CFO of Monterey Management - Tucson, Inc., one
of the corporations described in and which executed the foregoing instrument;
and that he signed his name thereto by like authority.
/s/ Xxxx X. Xxxxxx
--------------------------------------
Notary Public
My commission expires:
June 30, 1998
[SEAL]
STATE OF ARIZONA )
)ss.
County of Maricopa )
On the 10 day of September, 1996, before me personally came
Xxxxx X. Xxxx, to me known, who, being by me duly sworn, did depose and
say that he is the CFO of Monterey Homes - Tucson Corporation,
one of the corporations described in and which executed the foregoing
instrument; and that he signed his name thereto by like authority.
/s/ Xxxx X. Xxxxxx
------------------------------
Notary Public
My commission expires:
June 30, 1998 [SEAL]
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96
STATE OF MINNESOTA )
)ss.
County of Hennepin )
On the 11th day of September, 1996, before me personally came
Xxxxxxx X. Xxxxxxxxxx, to me known, who, being by me duly sworn, did depose and
say that he is a Vice President of Norwest Bank Minnesota, National
Association, one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation; and that he signed his
name thereto by like authority.
/s/ Xxxxxxx X. Xxxxxxx
--------------------------------
[SEAL] Notary Public
My commission expires 1-31-2000
- 12 -
97
SUPPLEMENT A
ACCEPTANCE
Homeplex Mortgage Investments Corporation, a Maryland corporation
("Homeplex"), hereby agrees that it shall be a "Guarantor" of the $8,000,000
aggregate principal amount of the 13% Senior Subordinated Notes due 2001 issued
by Monterey Management, Inc., an Arizona corporation ("Monterey"), pursuant to
the Indenture dated as of October 17, 1994 (as amended from time to time, the
"Indenture") among Monterey, Monterey Homes Corporation, an Arizona corporation,
and Norwest Bank Minnesota, National Association, as Trustee, and further agrees
to assume all of the obligations of a Guarantor and to abide by and be subject
to all of the terms and conditions of the Indenture that are imposed upon
Guarantors.
DATED this ____ day of ___________, 1996.
HOMEPLEX MORTGAGE INVESTMENTS
CORPORATION
By __________________________
Name: _______________________
Title: ______________________
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98
SECOND SUPPLEMENTAL INDENTURE, dated as of September 11, 1996,
among MONTEREY HOMES CONSTRUCTION II, INC. (formerly Monterey Management-Tucson,
Inc.), an Arizona corporation ("Construction"), having its principal office at
0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000, MONTEREY HOMES
ARIZONA II, INC. (formerly Monterey Homes-Tucson Corporation), an Arizona
corporation ("Arizona"), having its principal office at 0000 Xxxxx Xxxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000, and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee (the "Trustee"), having its principal Corporate Trust
Office at Norwest Center, Sixth and Marquette, Minneapolis, Minnesota
55479-0069, supplementing that certain Indenture, dated as of October 17, 1994
(as heretofore amended by the First Supplemental Indenture dated as of September
9, 1996, the "Indenture").
RECITALS OF THE COMPANY
The Company has heretofore executed and delivered to the Trustee the
Indenture providing for the issuance of up to $8,000,000 in aggregate principal
amount of its 13% Senior Subordinated Notes due 2001 (the "Notes").
Monterey Management, Inc., an Arizona corporation and formerly the
Company under the Indenture, has merged pursuant to Article 8 of the Indenture
with and into Construction, with Construction surviving and becoming the
successor Company under the Indenture.
Monterey Homes Corporation, an Arizona corporation and formerly a
Guarantor under the Indenture, has merged pursuant to Article 8 of the
Indenture, with and into Arizona, with Arizona surviving and becoming a
successor Guarantor under the Indenture.
Section 8.1(1) of the Indenture requires that the corporation into
which the Company and/or the Guarantor is merged, by indenture supplemental to
the Indenture, executed and delivered to the Trustee, in form satisfactory to
the Trustee, expressly assume the due and punctual payment of the principal of
(and premium, if any) and interest on all Notes and the performance of every
covenant of the Indenture on the part of the Company and/or the Guarantor to be
performed or observed.
All things necessary to make this Second Supplemental Indenture a
valid agreement of the Company, the Guarantor, and the Trustee, and a valid
supplement to the Indenture, in accordance with its terms, have been done.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the agreements set
forth in this Second Supplemental Indenture and intending to be legally bound
hereby, it is mutually agreed, for the equal and proportionate benefit of all
Holders of the Notes as follows:
99
ARTICLE ONE
Assumption
Section 101. Assumption of Obligations by Construction and Arizona.
(a) Construction by this Second Supplemental Indenture does
hereby expressly assume, as required by Section 8.1(1) of the Indenture, the due
and punctual payment of the principal of (and premium, if any) and interest on
all Notes and the performance of every covenant of the Indenture on the part of
the Company to be performed or observed.
(b) Arizona by this Second Supplemental Indenture does hereby
expressly assume, as required by Section 8.1(1) of the Indenture, the due and
punctual payment of the principal of (and premium, if any) and interest on all
Notes and the performance of every covenant of the Indenture on the part of the
Guarantor to be performed or observed.
ARTICLE TWO
Miscellaneous
Section 201. Miscellaneous.
(a) The Trustee accepts the trusts created by the Indenture,
as supplemented by this Second Supplemental Indenture, and agrees to
perform the same upon the terms and conditions of the Indenture, as
supplemented hereby.
(b) The recitals contained herein shall be taken as statements
of the Company and the Guarantor, and the Trustee assumes no
responsibility for their correctness.
(c) Each of the Company, the Guarantor, and the Trustee makes
and reaffirms as of the date of execution of this Second
Supplemental Indenture all of its respective representations,
covenants, and agreements set forth in the Indenture as supplemented
hereby.
(d) All covenants and agreements in this Second Supplemental
Indenture by the Company, the Guarantor, or the Trustee shall bind
its respective successors and assigns, whether so expressed or not.
(e) Except as otherwise provided herein, the Indenture shall
remain in full force and effect in accordance with its terms.
(f) This Second Supplemental Indenture shall be deemed to be
incorporated in, and made a part of, the Indenture, and the
Indenture, as supplemented hereby, shall be read, taken, and
construed as one and the same instrument.
(g) Nothing in this Second Supplemental Indenture, express or
implied, shall give to any Person, other than the parties hereto and
their successors hereunder and the Holders, any benefit or any legal
or equitable right, remedy, or claim under this Second Supplemental
Indenture.
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100
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed as of the day and year first above
written.
MONTEREY HOMES CONSTRUCTION II, INC.
By /s/ Xxxxx X. Xxxx
-----------------------------------------
Name: Xxxxx X. Xxxx
Title: CFO
MONTEREY HOMES ARIZONA II, INC.
By /s/ Xxxxx X. Xxxx
-----------------------------------------
Name: Xxxxx X. Xxxx
Title: CFO
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By /s/ Xxxxxxx X. Xxxxxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President
- 3 -
101
STATE OF ARIZONA )
)s.
County of Maricopa )
On the 11 day of September, 1996, before me personally came
Xxxxx X. Xxxx, to me known, who, being by me duly sworn, did depose and
say that he is the CFO of Monterey Homes Construction II, Inc.,
one of the corporations described in and which executed the foregoing instrument
and that he signed his name thereto by authority of the Board of Directors of
said corporation.
/s/ Xxxx X. Xxxxxx
--------------------------------------
Notary Public
My commission expires:
June 30, 1998
[SEAL]
STATE OF ARIZONA )
)ss.
County of Maricopa )
On the 11 day of September, 1996, before me personally came
Xxxxx X. Xxxx, to me known, who, being by me duly sworn, did depose and
say that he is the CFO of Monterey Homes Arizona II, Inc., one of
the corporations described in and which executed the foregoing instrument and
that he signed his name thereto by authority of the Board of Directors of said
corporation.
/s/ Xxxx X. Xxxxxx
-----------------------------------
Notary Public
My commission expires:
June 30, 1998 [SEAL]
- 4 -
102
STATE OF MINNESOTA )
)ss.
County of Hennepin )
On the 12TH day of September, 1996, before me personally came
Xxxxxxx X. Xxxxxxxxxx, to me known, who, being by me duly sworn, did depose and
say that he is a Vice President of Norwest Bank Minnesota, National
Association, one of the corporations described in and which executed the
foregoing instrument and that he signed his name thereto by authority of the
Board of Directors of said corporation.
/s/ Xxxxxxx X. Xxxxxxx
--------------------------------
[SEAL] Notary Public
My commission expires 1-31-2000
- 5 -
