EXHIBIT 4.17
EXECUTION COPY
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X.X. XXXXXX, INC. AND THE GUARANTORS PARTY HERETO
8.5% SENIOR NOTES DUE 2012
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FIRST SUPPLEMENTAL INDENTURE
DATED AS OF APRIL 11, 2002
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AMERICAN STOCK TRANSFER & TRUST COMPANY,
TRUSTEE
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TABLE OF CONTENTS
Page
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ARTICLE ONE
Scope of Supplemental Indenture; General
ARTICLE TWO
Certain Definitions
ARTICLE THREE
Covenants
Section 3.01. Repurchase of Notes upon Change of Control........................25
Section 3.02. Limitations on Indebtedness.......................................26
Section 3.03. Limitations on Restricted Payments................................27
Section 3.04. Limitations on Transactions with Affiliates.......................29
Section 3.05. Limitations on Dispositions of Assets.............................30
Section 3.06. Limitations on Liens..............................................31
Section 3.07. Limitations on Restrictions Affecting Restricted Subsidiaries.....32
Section 3.08. Limitations on Mergers, Consolidations and Sales of Assets........33
Section 3.09. Reports to Holders of Notes.......................................34
ARTICLE FOUR
Miscellaneous
Section 4.01. Governing Law.....................................................34
Section 4.02. No Adverse Interpretation of Other Agreements.....................34
Section 4.03. No Recourse Against Others........................................35
Section 4.04. Successors and Assigns............................................35
Section 4.05. Duplicate Originals...............................................35
Section 4.06. Severability......................................................35
-i-
FIRST SUPPLEMENTAL INDENTURE dated as of April 11, 2002
("Supplemental Indenture"), to the Indenture dated as of April 11, 2002 (as
amended, modified or supplemented from time to time in accordance therewith, the
"Indenture"), by and among X.X. XXXXXX, INC., a Delaware corporation (the
"Company"), each of the Guarantors (as defined herein) and AMERICAN STOCK
TRANSFER & TRUST COMPANY, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the holders of Notes (as defined
herein):
WHEREAS, the Company, the Guarantors and the Trustee have duly
authorized the execution and delivery of the Indenture to provide for the
issuance from time to time of senior debt securities ("Securities") to be issued
in one or more series as in the Indenture provided;
WHEREAS, the Company and the Guarantors desire and have
requested the Trustee to join them in the execution and delivery of this
Supplemental Indenture in order to establish and provide for the issuance by the
Company of a series of Securities designated as its 8.5% Senior Notes due 2012.
The 8.5% Senior Notes due 2012 shall be substantially in the form attached
hereto as Exhibit A (the "Initial Notes"), and the 8.5% Senior Notes due 2012 to
be offered in exchange for the Initial Notes pursuant to the terms of the
Registration Rights Agreement, shall be substantially in the form attached
hereto as Exhibit B (the "Exchange Notes" and together with the Initial Notes,
the "Notes"), guaranteed by the Guarantors, on the terms set forth herein;
WHEREAS, Section 2.01 of the Indenture provides that a
supplemental indenture may be entered into by the Company, the Guarantors and
the Trustee for such purpose provided certain conditions are met;
WHEREAS, the conditions set forth in the Indenture for the
execution and delivery of this Supplemental Indenture have been complied with;
and
WHEREAS, all things necessary to make this Supplemental
Indenture a valid agreement of the Company, the Guarantors and the Trustee, in
accordance with its terms, and a valid amendment of, and supplement to, the
Indenture have been done;
NOW, THEREFORE:
In consideration of the premises and the purchase and
acceptance of the Notes by the holders thereof the Company and the Guarantors
mutually covenant and agree with the Trustee, for the equal and ratable benefit
of the holders, that the Indenture is supplemented and amended, to the extent
expressed herein, as follows:
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ARTICLE ONE
SCOPE OF SUPPLEMENTAL INDENTURE; GENERAL
The changes, modifications and supplements to the Indenture
effected by this Supplemental Indenture shall be applicable only with respect
to, and govern the terms of, the Notes, which shall not be limited in aggregate
principal amount, and shall not apply to any other Securities that may be issued
under the Indenture unless a supplemental indenture with respect to such other
Securities specifically incorporates such changes, modifications and
supplements. Pursuant to this Supplemental Indenture, there is hereby created
and designated a series of Securities under the Indenture entitled "8.5% Senior
Notes due 2012." The Initial Notes shall be in the form of Exhibit A and the
Exchange Notes shall be in the form of Exhibit B hereto. The Notes shall be
guaranteed by the Guarantors as provided in such form and the Indenture. If
required, the Notes may bear an appropriate legend regarding original issue
discount for federal income tax purposes.
ARTICLE TWO
CERTAIN DEFINITIONS
The following terms have the meanings set forth below in this
Supplemental Indenture. Capitalized terms used but not defined herein have the
meanings ascribed to such terms in the Indenture. To the extent terms defined
herein differ from the Indenture the terms defined herein will govern.
"Acquired Indebtedness" means (i) with respect to any Person
that becomes a Restricted Subsidiary (or is merged into the Company or any
Restricted Subsidiary) after the Issue Date, Indebtedness of such Person or any
of its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary (or is merged into the Company or any Restricted Subsidiary) that was
not incurred in connection with, or in contemplation of, such Person becoming a
Restricted Subsidiary (or being merged into the Company or any Restricted
Subsidiary) and (ii) with respect to the Company or any Restricted Subsidiary,
any Indebtedness expressly assumed by the Company or any Restricted Subsidiary
in connection with the acquisition of any assets from another Person (other than
the Company or any Restricted Subsidiary), which Indebtedness was not incurred
by such other Person in connection with or in contemplation of such acquisition.
Indebtedness incurred in connection with or in contemplation of any transaction
described in clause (i) or (ii) of the preceding sentence shall be deemed to
have been incurred by the Company or a Restricted Subsidiary, as the case may
be, at the time such Person becomes a Restricted Subsidiary (or is merged into
the Company or any Restricted Subsidiary) in the case of clause (i) or at the
time of the acquisition of such assets in the case of clause (ii), but shall not
be deemed Acquired Indebtedness.
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"Affiliate" means, when used with reference to a specified
Person, any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Person specified.
"Affiliate Transaction" has the meaning set forth in Section
3.03 hereof.
"Asset Acquisition" means (i) an Investment by the Company or
any Restricted Subsidiary in any other Person if, as a result of such
Investment, such Person shall become a Restricted Subsidiary or shall be
consolidated or merged with or into the Company or any Restricted Subsidiary or
(ii) the acquisition by the Company or any Restricted Subsidiary of the assets
of any Person, which constitute all or substantially all of the assets or of an
operating unit or line of business of such Person or which is otherwise outside
the ordinary course of business.
"Asset Disposition" means any sale, transfer, conveyance,
lease or other disposition (including, without limitation, by way of merger,
consolidation or sale and leaseback or sale of shares of Capital Stock in any
Subsidiary) (each, a "transaction") by the Company or any Restricted Subsidiary
to any Person of any Property having a fair market value in any transaction or
series of related transactions of at least $10 million. The term "Asset
Disposition" shall not include (i) a transaction between the Company and any
Restricted Subsidiary or a transaction between Restricted Subsidiaries, (ii) a
transaction in the ordinary course of business, including, without limitation,
sales (directly or indirectly), dedications and other donations to governmental
authorities, leases and sales and leasebacks of (A) homes, improved land and
unimproved land and (B) real estate (including related amenities and
improvements), (iii) a transaction involving the sale of Capital Stock of, or
the disposition of assets in, an Unrestricted Subsidiary, (iv) any exchange or
swap of assets of the Company or any Restricted Subsidiary for assets that (x)
are to be used by the Company or any Restricted Subsidiary in the ordinary
course of its Real Estate Business and (y) have a Fair Market Value not less
than the Fair Market Value of the assets exchanged or swapped, (v) any sale,
transfer, conveyance, lease or other disposition of assets and properties of the
Company that is governed by Section 3.08 hereof, or (iv) dispositions of
mortgage loans and related assets and mortgage-backed securities in the ordinary
course of a mortgage lending business.
"Attributable Debt" means, with respect to any Capitalized
Lease Obligations, the capitalized amount thereof determined in accordance with
GAAP.
"Bankruptcy Law" means title 11 of the United States Code, as
amended, or any similar federal or state law for the relief of debtors.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in
New York,
New
York are authorized or obligated by law or executive order to close.
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"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
or in such Person's capital stock or other equity interests, and options, rights
or warrants to purchase such capital stock or other equity interests, whether
now outstanding or issued after the Issue Date, including, without limitation,
all Disqualified Stock and Preferred Stock.
"Capitalized Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of such obligations will be the capitalized amount thereof
determined in accordance with GAAP.
"Cash Equivalents" means: (a) U.S. dollars; (b) securities
issued or directly and fully guaranteed or insured by the U.S. government or any
agency or instrumentality thereof having maturities of one year or less from the
date of acquisition; (c) certificates of deposit and eurodollar time deposits
with maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500 million; (d) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(b) and (c) entered into with any financial institution meeting the
qualifications specified in clause (c) above; (e) commercial paper rated P-1,
A-1 or the equivalent thereof by Xxxxx'x Investors Service, Inc. or Standard &
Poor's Ratings Group, respectively, and in each case maturing within six months
after the date of acquisition; and (f) investments in money market funds
substantially all of the assets of which consist of securities described in the
foregoing clauses (a) through (e).
"Change of Control" means (i) any sale, lease or other
transfer (in one transaction or a series of transactions) of all or
substantially all of the consolidated assets of the Company and its Restricted
Subsidiaries to any Person (other than a Restricted Subsidiary); provided,
however, that a transaction where the holders of all classes of Common Equity of
the Company immediately prior to such transaction own, directly or indirectly,
more than 50% of all classes of Common Equity of such Person immediately after
such transaction shall not be a Change of Control; (ii) a "person" or "group"
(within the meaning of Section 13(d) of the Exchange Act (other than (x) the
Company or (y) Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, or their respective wives,
children, grandchildren and other descendants, or any trust or other entity
formed or controlled by any of such individuals)) becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) of Common Equity of the
Company representing more than 50% of the voting power of the Common Equity of
the Company; (iii) Continuing Directors cease to constitute at least a majority
of the Board of Directors of the Company; or (iv) the stockholders of the
Company approve any plan or proposal for the liquidation or dissolution of the
Company; provided, however, that a liquidation or dissolution of the Company
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which is part of a transaction that does not constitute a Change of Control
under the proviso contained in clause (i) above shall not constitute a Change of
Control.
"Common Equity" of any Person means Capital Stock of such
Person that is generally entitled to (i) vote in the election of directors of
such Person or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or others
that will control the management or policies of such Person.
"Consolidated Adjusted Tangible Assets" of the Company as of
any date means the Consolidated Tangible Assets of the Company and the
Restricted Subsidiaries at the end of the fiscal quarter immediately preceding
the date less any assets securing any Non-Recourse Indebtedness, as determined
in accordance with GAAP.
"Consolidated Cash Flow Available for Fixed Charges" means,
for any period, on a consolidated basis for the Company and the Restricted
Subsidiaries, Consolidated Net Income for such period plus (each to the extent
deducted in calculating such Consolidated Net Income and determined in
accordance with GAAP) (a) the sum for such period, without duplication, of (i)
income taxes, (ii) Consolidated Interest Expense, (iii) depreciation and
amortization expenses and other non-cash charges to earnings and (iv) interest
and financing fees and expenses which were previously capitalized and which are
amortized to cost of sales, minus (b) all other non-cash items (other than the
receipt of notes receivable) increasing such Consolidated Net Income.
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to any determination date, the ratio of (x) Consolidated Cash Flow Available for
Fixed Charges for the prior four full fiscal quarters (the "Four Quarter
Period") for which financial results have been reported immediately preceding
the determination date (the "Transaction Date"), to (y) the aggregate
Consolidated Interest Incurred for the Four Quarter Period. For purposes of this
definition, "Consolidated Cash Flow Available for Fixed Charges" and
"Consolidated Interest Incurred" shall be calculated after giving effect on a
pro forma basis for the period of such calculation to (i) the incurrence or the
repayment, repurchase, defeasance or other discharge or the assumption by
another Person that is not an Affiliate (collectively, "repayment") of any
Indebtedness of the Company or any Restricted Subsidiary (and the application of
the proceeds thereof) giving rise to the need to make such calculation, and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), at any time on or after the first day of the Four Quarter
Period and on or prior to the Transaction Date, as if such incurrence or
repayment, as the case may be (and the application of the proceeds thereof),
occurred on the first day of the Four Quarter Period, except that Indebtedness
under revolving credit facilities shall be deemed to be the average daily
balance of such Indebtedness during the Four Quarter Period (as reduced on such
pro forma basis by the application of any proceeds of the incurrence of
Indebtedness giving rise to the need to make such calculation); (ii) any Asset
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Disposition or Asset Acquisition (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Company or any Restricted Subsidiary (including any Person that becomes a
Restricted Subsidiary as a result of any such Asset Acquisition) incurring
Acquired Indebtedness at any time on or after the first day of the Four Quarter
Period and on or prior to the Transaction Date), as if such Asset Disposition or
Asset Acquisition (including the incurrence or repayment of any such
Indebtedness) and the inclusion, notwithstanding clause (ii) of the definition
of "Consolidated Net Income," of any Consolidated Cash Flow Available for Fixed
Charges associated with such Asset Acquisition as if it occurred on the first
day of the Four Quarter Period; provided, however, that the Consolidated Cash
Flow Available for Fixed Charges associated with any Asset Acquisition shall not
be included to the extent the net income so associated would be excluded
pursuant to the definition of "Consolidated Net Income," other than clause (ii)
thereof, as if it applied to the Person or assets involved before they were
acquired; and (iii) the Consolidated Cash Flow Available for Fixed Charges and
the Consolidated Interest Incurred attributable to discontinued operations, as
determined in accordance with GAAP, shall be excluded. Furthermore, in
calculating "Consolidated Cash Flow Available for Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio," (1) interest on Indebtedness in respect of which a pro
forma calculation is required that is determined on a fluctuating basis as of
the Transaction Date (including Indebtedness actually incurred on the
Transaction Date) and which will continue to be so determined thereafter shall
be deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness in effect on the Transaction Date; and (2)
notwithstanding clause (1) above, interest on such Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by agreements relating
to Interest Protection Agreements, shall be deemed to accrue at the rate per
annum resulting after giving effect to the operation of such agreements.
"Consolidated Interest Expense" of the Company for any period
means the Interest Expense of the Company and the Restricted Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Incurred" for any period means the
Interest Incurred of the Company and the Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" for any period means the aggregate
net income (or loss) of the Company and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP; provided that there
will be excluded from such net income (loss) (to the extent otherwise included
therein), without duplication: (i) the net income (or loss) of (x) any
Unrestricted Subsidiary (other than a Mortgage Subsidiary) or (y) any Person
(other than a Restricted Subsidiary) in which any Person other than the Company
or any Restricted Subsidiary has an ownership interest, except, in each case, to
the extent that any such income
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has actually been received by the Company or any Restricted Subsidiary in the
form of cash dividends or similar cash distributions during such period, which
dividends or distributions are not in excess of the Company's or such Restricted
Subsidiary's (as applicable) pro rata share of such Unrestricted Subsidiary's or
such other Person's net income earned during such period, (ii) except to the
extent includable in Consolidated Net Income pursuant to the foregoing clause
(i), the net income (or loss) of any Person that accrued prior to the date that
(a) such Person becomes a Restricted Subsidiary or is merged with or into or
consolidated with the Company or any of its Restricted Subsidiaries (except, in
the case of an Unrestricted Subsidiary that is redesignated a Restricted
Subsidiary during such period, to the extent of its retained earnings from the
beginning of such period to the date of such redesignation) or (b) the assets of
such Person are acquired by the Company or any Restricted Subsidiary, (iii) the
net income of any Restricted Subsidiary to the extent that (but only so long as)
the declaration or payment of dividends or similar distributions by such
Restricted Subsidiary of that income is not permitted by operation of the terms
of its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary during
such period, (iv) the gains or losses, together with any related provision for
taxes, realized during such period by the Company or any Restricted Subsidiary
resulting from (a) the acquisition of securities, or extinguishment of
Indebtedness, of the Company or any Restricted Subsidiary or (b) any Asset
Disposition by the Company or any Restricted Subsidiary, (v) any extraordinary
gain or loss together with any related provision for taxes, realized by the
Company or any Restricted Subsidiary and (vi) any non-recurring expense recorded
by the Company or any Restricted Subsidiary in connection with a merger
accounted for as a "pooling-of-interests" transaction; provided, further, that
for purposes of calculating Consolidated Net Income solely as it relates to
clause (iii) of Section 3.03(a) hereof, clause (iv)(b) above shall not be
applicable.
"Consolidated Net Worth" of any Person as of any date means
the stockholders' equity (including any Preferred Stock that is classified as
equity under GAAP, other than Disqualified Stock) of such Person and its
Restricted Subsidiaries on a consolidated basis at the end of the fiscal quarter
immediately preceding such date, as determined in accordance with GAAP, less any
amount attributable to Unrestricted Subsidiaries.
"Consolidated Tangible Assets" of the Company as of any date
means the total amount of assets of the Company and its Restricted Subsidiaries
(less applicable reserves) on a consolidated basis at the end of the fiscal
quarter immediately preceding such date, as determined in accordance with GAAP,
less: (i) Intangible Assets and (ii) appropriate adjustments on account of
minority interests of other Persons holding equity investments in Restricted
Subsidiaries.
"Continuing Director" means a director who either was a member
of the Board of Directors of the Company on the date of this Indenture or who
became a director of the
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Company subsequent to such date and whose election, or nomination for election
by the Company's stockholders, was duly approved by a majority of the Continuing
Directors on the Board of Directors of the Company at the time of such approval,
either by a specific vote or by approval of the proxy statement issued by the
Company on behalf of the entire Board of Directors of the Company in which such
individual is named as nominee for director.
"control", when used with respect to any Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Credit Facilities" means, collectively, each of the credit
facilities and guidance lines of credit of the Company or one or more Restricted
Subsidiaries in existence on the date of this Supplemental Indenture and one or
more other facilities or guidance lines of credit among or between the Company
or one or more Restricted Subsidiaries and one or more lenders pursuant to which
the Company or any Restricted Subsidiary may incur indebtedness for working
capital and general corporate purposes (including acquisitions), as any such
facility or line of credit may amended, restated, supplemented or otherwise
modified from time to time, and includes any agreement extending the maturity
of, increasing the amount of, or restructuring, all or any portion of the
Indebtedness under any such facility or line of credit or any successor
facilities or lines of credit and includes any facility or line of credit with
one or more lenders refinancing or replacing all or any portion of the
Indebtedness under such facility or line of credit or any successor facility or
line of credit.
"Currency Agreement" of any Person means any foreign exchange
contract, currency swap agreement or other similar agreement or arrangement
designed to protect such Person or any of its Subsidiaries against fluctuations
in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
"Default" means any event, act or condition that is, or after
notice or the passage of time or both would be, an Event of Default.
"Designation Amount" has the meaning provided in the
definition of Unrestricted Subsidiary.
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, (i) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the final maturity date of the Notes or (ii) is convertible into or
exchangeable or
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exercisable for (whether at the option of the issuer or the holder thereof) (a)
debt securities or (b) any Capital Stock referred to in (i) above, in each case,
at any time prior to the final maturity date of the Notes provided, however,
that any Capital Stock that would not constitute Disqualified Stock but for
provisions thereof giving holders thereof (or the holders of any security into
or for which such Capital Stock is convertible, exchangeable or exercisable) the
right to require the Company to repurchase or redeem such Capital Stock upon the
occurrence of a change in control occurring prior to the final maturity date of
the Notes shall not constitute Disqualified Stock if the change in control
provisions applicable to such Capital Stock are no more favorable to such
holders than Section 3.01 hereof and such Capital Stock specifically provides
that the Company will not repurchase or redeem any such Capital Stock pursuant
to such provisions prior to the Company's repurchase of the Notes as are
required pursuant to Section 3.01 hereof.
"Dollars" and "$" mean United States Dollars.
"Event of Default" means:
(1) the failure by the Company to pay interest on any Note
when the same becomes due and payable and the continuance of any such
failure for a period of 30 days;
(2) the failure by the Company to pay the principal or premium
of any Note when the same becomes due and payable at maturity, upon
acceleration or otherwise;
(3) the failure by the Company or any Restricted Subsidiary to
comply with any of its agreements or covenants in, or provisions of,
the Notes, the Guarantees or the Indenture and such failure continues
for the period and after the notice specified below (except in the case
of a default under Section 3.01 or 3.08, which will constitute Events
of Default with notice but without passage of time);
(4) the acceleration of any Indebtedness (other than
Non-Recourse Indebtedness) of the Company or any Restricted Subsidiary
that has an outstanding principal amount of $25 million or more,
individually or in the aggregate, and such acceleration does not cease
to exist, or such Indebtedness is not satisfied, in either case within
30 days after such acceleration;
(5) the failure by the Company or any Restricted Subsidiary to
make any principal or interest payment in an amount of $25 million or
more, individually or in the aggregate, in respect of Indebtedness
(other than Non-Recourse Indebtedness) of the Company or any Restricted
Subsidiary within 30 days of such principal or interest becoming due
and payable (after giving effect to any applicable grace period set
forth in the documents governing such Indebtedness);
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(6) a final judgment or judgments that exceed $25 million or
more, individually or in the aggregate, for the payment of money having
been entered by a court or courts of competent jurisdiction against the
Company or any of its Restricted Subsidiaries and such judgment or
judgments is not satisfied, stayed, annulled or rescinded within 60
days of being entered;
(7) the Company or any Restricted Subsidiary that is a
Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of it
or for all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Restricted Subsidiary that is a Significant Subsidiary as
debtor in an involuntary case,
(B) appoints a Custodian of the Company or any
Restricted Subsidiary that is a Significant Subsidiary or a
Custodian for all or substantially all of the property of the
Company or any Restricted Subsidiary that is a Significant
Subsidiary, or
(C) orders the liquidation of the Company or any
Restricted Subsidiary that is a Significant Subsidiary,
and the order or decree remains unstayed and in effect for 60 days; or
(9) any Guarantee of a Guarantor which is a Significant
Subsidiary ceases to be in full force and effect (other than in
accordance with the terms of such Guarantee and the Indenture) or is
declared null and void and unenforceable or found to be invalid or any
Guarantor denies its liability under its Guarantee (other than by
reason of release of a Guarantor from its Guarantee in accordance with
the terms of the Indenture and the Guarantee).
"Exchange Notes" has the meaning provided in the Recitals.
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"Fair Market Value" means, with respect to any asset, the
price (after taking into account any liabilities relating to such assets) that
would be negotiated in an arm's-length transaction for cash between a willing
seller and a willing and able buyer, neither of which is under any compulsion to
complete the transaction, as such price is determined in good faith by the Board
of Directors of the Company or a duly authorized committee thereof, as evidenced
by a resolution of such Board or committee.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect from time to time.
"Guarantors" means (i) initially, on the Issue Date, each of:
Allegra, LLC, a California limited liability company;
AP LHI, Inc., a California corporation;
AP Western GP Corporation, a Delaware corporation;
AP WP Operating Corporation, a Delaware corporation;
AP WP Partners, L.P., a Delaware limited partnership;
APLAM, LLC, a California limited liability company;
C. Xxxxxxx Xxxxxx Builders, Inc., a Virginia corporation;
CH Investments of Texas, Inc., a Delaware corporation;
CHI Construction Company, an Arizona corporation;
CHTEX of Texas, Inc., a Delaware corporation;
Continental Homes of Florida, Inc., a Florida corporation;
Continental Homes of Texas, L.P., a Texas limited partnership;
Continental Homes, Inc., a Delaware corporation;
Continental Residential, Inc., a California corporation;
X.X. Xxxxxx - Emerald, Ltd., a Texas limited partnership;
X.X. Xxxxxx - Texas, Ltd., a Texas limited partnership;
X.X. Xxxxxx Los Angeles Holding Company, Inc., a California
corporation;
X.X. Xxxxxx Management Company, Ltd., a Texas limited
partnership;
X.X. Xxxxxx San Diego Holding Company, Inc., a California
corporation;
X.X. Xxxxxx, Inc. - Birmingham, an Alabama corporation;
X.X. Xxxxxx, Inc. - Chicago, a Delaware corporation;
X.X. Xxxxxx, Inc. - Denver, a Delaware corporation;
X.X. Xxxxxx, Inc. - Xxxxx-Xxxxx, a Delaware corporation;
X.X. Xxxxxx, Inc. - Greensboro, a Delaware corporation;
X.X. Xxxxxx, Inc. - Jacksonville, a Delaware corporation;
12
X.X. Xxxxxx, Inc. - Louisville, a Delaware corporation;
X.X. Xxxxxx, Inc. - Minnesota, a Delaware corporation;
X.X. Xxxxxx, Inc. - New Jersey, a Delaware corporation;
X.X. Xxxxxx, Inc. - Portland, a Delaware corporation;
X.X. Xxxxxx, Inc. - Sacramento, a California corporation;
X.X. Xxxxxx, Inc. - Torrey, a Delaware corporation;
X.X. Xxxxxx-Xxxxxxx Homes, LLC, a Delaware limited liability
company;
DRH Cambridge Homes, Inc., a California corporation;
DRH Cambridge Homes, LLC, a Delaware limited liability
company;
DRH Construction, Inc., a Delaware corporation;
DRH Regrem II, Inc., a Delaware corporation;
DRH Regrem III, Inc., a Delaware corporation;
DRH Regrem IV, Inc., a Delaware corporation;
DRH Regrem V, Inc., a Delaware corporation;
DRH Regrem VII, LP, a Texas limited partnership;
DRH Regrem VIII, LLC, a Delaware limited liability company;
DRH Southwest Construction, Inc., a California corporation;
DRH Title Company of Colorado, Inc., a Colorado corporation;
DRH Tucson Construction, Inc., a Delaware corporation;
DRHI, Inc., a Delaware corporation;
HPH Homebuilders 2000 L.P., a California limited partnership;
KDB Homes, Inc., a Delaware corporation;
LAMCO Housing, Inc., a California corporation;
Xxxxxxx I, Ltd., a Delaware limited partnership;
Xxxxxxx II, Ltd., a Delaware limited partnership;
Xxxxxxx VIII, Ltd., a Delaware limited partnership;
Xxxxxxx IX, Inc., a New Jersey corporation;
Xxxxxxx X, Inc., a New Jersey corporation;
Melody Homes, Inc., a Delaware corporation;
Melmort Co., a Colorado corporation;
Xxxxxx XX LLC, a Delaware limited liability company;
Xxxxxxx Homes of Arizona LLC, a Delaware limited liability
company;
Xxxxxxx Homes of California, Inc., a California corporation;
Xxxxxxx Homes of Oregon, Inc., an Oregon corporation;
Xxxxxxx Homes of Washington, Inc., a Washington corporation;
Xxxxxxx Mortgage, Inc., a Delaware corporation;
Xxxxxxx Realty Hawaii, Inc., a Hawaii corporation;
Xxxxxxx Realty/Maui, Inc., a Hawaii corporation;
SGS Communities at Grande Quay, LLC, a New Jersey limited
liability company;
SHA Construction LLC, a Delaware limited liability company;
13
SHLR of California, Inc., a California corporation;
SHLR of Colorado, Inc., a Colorado corporation;
SHLR of Nevada, Inc., a Nevada corporation;
SHLR of Utah, Inc., a Utah corporation;
SHLR of Washington, Inc., a Washington corporation;
SRHI LLC, a Delaware limited liability company;
SSHI LLC, a Delaware limited liability company;
Vertical Construction Corporation, a Delaware corporation;
Western Pacific Funding, Inc., a California corporation;
Western Pacific Housing Co., a California corporation;
Western Pacific Housing Management, Inc., a California
corporation;
Western Pacific Housing, Inc., a Delaware corporation;
Western Pacific Housing-Antigua, LLC, a Delaware limited
liability company;
Western Pacific Housing-Aviara, L.P., a California limited
partnership;
Western Pacific Housing-Boardwalk, LLC, a Delaware limited
liability company;
Western Pacific Housing-Broadway, LLC, a Delaware limited
liability company;
Western Pacific Housing-Canyon Park, LLC, a Delaware limited
liability company;
Western Pacific Housing-Carmel, LLC, a Delaware limited
liability company; Western Pacific Housing-Xxxxxxxx, LLC, a
Delaware limited liability company; Western Pacific
Housing-Communications Hill, LLC, a Delaware limited
liability company;
Western Pacific Housing-Copper Canyon, LLC, a Delaware limited
liability company;
Western Pacific Housing-Creekside, LLC, a Delaware limited
liability company;
Western Pacific Housing-Xxxxxx City, L.P., a California
limited partnership;
Western Pacific Housing-Del Xxxxx, LLC, a Delaware limited
liability company;
Western Pacific Housing-Lomas Verdes, LLC, a Delaware limited
liability company;
Western Pacific Housing-Lost Hills Park, LLC, a Delaware
limited liability company;
Western Pacific Housing-XxXxxxxxx Canyon, LLC, a Delaware
limited liability company;
Western Pacific Housing-Mountaingate, L.P., a California
limited partnership;
Western Pacific Housing-Norco Estates, LLC, a Delaware limited
liability company;
Western Pacific Housing-Oso, L.P., a California limited
partnership;
14
Western Pacific Housing-Pacific Park II, LLC, a Delaware
limited liability company;
Western Pacific Housing-Park Avenue East, LLC, a Delaware
limited liability company;
Western Pacific Housing-Park Avenue West, LLC, a Delaware
limited liability company;
Western Pacific Housing-Playa Vista, LLC, a Delaware limited
liability company;
Western Pacific Housing-Poinsettia, L.P., a California limited
partnership;
Western Pacific Housing-River Ridge, LLC, a Delaware limited
liability company;
Western Pacific Housing-Robinhood Ridge, LLC, a Delaware
limited liability company;
Western Pacific Housing-Santa Fe, LLC, a Delaware limited
liability company;
Western Pacific Housing-Scripps II, LLC, a
Delaware limited liability company;
Western Pacific Housing-Scripps, L.P., a California limited
partnership;
Western Pacific Housing-Seacove, L.P., a California limited
partnership;
Western Pacific Housing-Studio 528, LLC, a Delaware limited
liability company;
Western Pacific Housing-Terra Bay Duets, LLC, a Delaware
limited liability company;
Western Pacific Housing-Torrance, LLC, a Delaware limited
liability company;
Western Pacific Housing-Torrey Commercial, LLC, a Delaware
limited liability company;
Western Pacific Housing-Xxxxxx Xxxxxxx, LLC, a Delaware
limited liability company;
Western Pacific Housing-Torrey Multi-Family, LLC, a Delaware
limited liability company;
Western Pacific Housing-Torrey Village Center, LLC, a Delaware
limited liability company;
Western Pacific Housing-Vineyard Terrace, LLC, a Delaware
limited liability company;
Western Pacific Housing-Windemere, LLC, a Delaware limited
liability company;
Western Pacific Housing-Windflower, L.P., a California limited
partnership;
WPH-Camino Xxxx, LLC, a Delaware limited liability company;
WPH-HPH, LLC, a Delaware limited liability company;
15
and (ii) each of the Company's Subsidiaries which becomes a guarantor of Notes
pursuant to the provisions of the Indenture. An Unrestricted Subsidiary may
become a Guarantor if it (x) is so designated by resolution of the Board of
Directors of the Company and (y) executes a supplemental indenture satisfactory
to the Trustee.
"Holder" means the Person in whose name a Note is registered
in the books of the Registrar for the Notes.
"incurrence" has the meaning set forth in Section 3.01.
"Indebtedness" of any Person means, without duplication, (i)
any liability of such Person (a) for borrowed money or under any reimbursement
obligation relating to a letter of credit or other similar instruments (other
than standby letters of credit or similar instrument issued for the benefit of
or surety, performance, completion or payment xxxxx, xxxxxxx money notes or
similar purpose undertakings or indemnifications issued by, such Person in the
ordinary course of business), (b) evidenced by a bond, note, debenture or
similar instrument (including a purchase money obligation) given in connection
with the acquisition of any businesses, properties or assets of any kind or with
services incurred in connection with capital expenditures (other than any
obligation to pay a contingent purchase price which, as of the date of
incurrence thereof is not required to be recorded as a liability in accordance
with GAAP), or (c) in respect of Capitalized Lease Obligations (to the extent of
the Attributable Debt in respect thereof), (ii) any Indebtedness of others that
such Person has guaranteed to the extent of the guarantee, (iii) to the extent
not otherwise included, the obligations of such Person under Currency Agreements
or Interest Protection Agreements to the extent recorded as liabilities not
constituting Interest Incurred, net of amounts recorded as assets in respect of
such agreements, in accordance with GAAP, and (iv) all Indebtedness of others
secured by a Lien on any asset of such Person, whether or not such Indebtedness
is assumed by such Person; provided, that Indebtedness shall not include
accounts payable, liabilities to trade creditors of such Person or other accrued
expenses arising in the ordinary course of business. The amount of Indebtedness
of any Person at any date shall be (a) the outstanding balance at such date of
all unconditional obligations as described above, net of any unamortized
discount to be accounted for as Interest Expense, in accordance with GAAP, (b)
the maximum liability of such Person for any contingent obligations under clause
(ii) above at such date, net of any unamortized discount to be accounted for as
Interest Expense in accordance with GAAP and (c) in the case of clause (iv)
above, the lesser of (1) the fair market value of any asset subject to a Lien
securing the Indebtedness of others on the date that the Lien attaches and (2)
the amount of the Indebtedness secured.
"Indenture" has the meaning provided in the Recitals.
"Initial Notes" has the meaning provided in the Recitals.
16
"Initial Purchasers" means Xxxxxxx Xxxxx Xxxxxx Inc., Banc of
America Securities LLC, Credit Lyonnais Securities (USA) Inc., and Fleet
Securities, Inc.
"Intangible Assets" of the Company means all unamortized debt
discount and expense, unamortized deferred charges, goodwill, patents,
trademarks, service marks, trade names, copyrights, write-ups of assets over
their prior carrying value (other than write-ups which occurred prior to the
Issue Date and other than, in connection with the acquisition of an asset, the
write-up of the value of such asset (within one year of its acquisition) to its
fair market value in accordance with GAAP) and all other items which would be
treated as intangibles on the consolidated balance sheet of the Company and the
Restricted Subsidiaries prepared in accordance with GAAP.
"interest" means, with respect to the Notes, the sum of
interest and any Liquidated Damages on the Notes.
"Interest Expense" of any Person for any period means, without
duplication, the aggregate amount of (i) interest which, in conformity with
GAAP, would be set opposite the caption "interest expense" or any like caption
on an income statement for such Person (including, without limitation, imputed
interest included in Capitalized Lease Obligations, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, the net costs (but reduced by net gains) associated with
Currency Agreements and Interest Protection Agreements, amortization of other
financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other noncash
interest expense other than interest and other charges amortized to cost of
sales), and (ii) all interest actually paid by the Company or a Restricted
Subsidiary under any guarantee of Indebtedness (including, without limitation, a
guarantee of principal, interest or any combination thereof) of any Person other
than the Company or any Restricted Subsidiary during such period; provided, that
Interest Expense shall exclude any expense associated with the complete
write-off of financing fees and expenses in connection with the repayment of any
Indebtedness.
"Interest Incurred" of any Person for any period means,
without duplication, the aggregate amount of (i) Interest Expense and (ii) all
capitalized interest and amortized debt issuance costs.
"Interest Protection Agreement" of any Person means any
interest rate swap agreement, interest rate collar agreement, option or futures
contract or other similar agreement or arrangement designed to protect such
Person or any of its Subsidiaries against fluctuations in interest rates with
respect to Indebtedness permitted to be incurred under this Supplemental
Indenture.
17
"Investment Grade" shall mean BBB- or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such ratings by S&P or Moody's.
"Investments" of any Person means (i) all investments by such
Person in any other Person in the form of loans, advances or capital
contributions, (ii) all guarantees of Indebtedness or other obligations of any
other Person by such Person, (iii) all purchases (or other acquisitions for
consideration) by such Person of Indebtedness, Capital Stock or other securities
of any other Person and (iv) all other items that would be classified as
investments in any other Person (including, without limitation, purchases of
assets outside the ordinary course of business) on a balance sheet of such
Person prepared in accordance with GAAP.
"Issue Date" means the date on which the Notes are originally
issued under this Supplemental Indenture.
"Lien" means, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such Property. For purposes of this definition, a Person shall be deemed to own,
subject to a Lien, any Property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Property.
"Liquidated Damages" shall have the meaning provided in
paragraph 6 of the Initial Note.
"Marketable Securities" means (a) equity securities that are
listed on the
New York Stock Exchange, the American Stock Exchange or The Nasdaq
National Market and (b) debt securities that are rated by a nationally
recognized rating agency, listed on the
New York Stock Exchange or the American
Stock Exchange or covered by at least two reputable market makers.
"Moody's" means Xxxxx'x Investors Service, Inc. or any
successor to its debt rating business.
"Mortgage Subsidiary" means any Subsidiary of the Company
substantially all of whose operations consist of the mortgage lending business.
"Net Cash Proceeds" means, with respect to an Asset
Disposition, cash payments received (including any cash payments received by way
of deferred payment of principal pursuant to a note or installment receivable or
otherwise (including any cash received upon sale or disposition of such note or
receivable), but only as and when received), excluding any other consideration
received in the form of assumption by the acquiring Person of Indebtedness or
other obligations relating to the Property disposed of in such Asset Disposition
or received in any other non-cash form unless and until such non-cash
consideration is converted into cash
18
therefrom, in each case, net of all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal, state and
local taxes required to be accrued as a liability under GAAP as a consequence of
such Asset Disposition, and in each case net of a reasonable reserve for the
after-tax cost of any indemnification or other payments (fixed and contingent)
attributable to the seller's indemnities or other obligations to the purchaser
undertaken by the Company or any of its Restricted Subsidiaries in connection
with such Asset Disposition, and net of all payments made on any Indebtedness
which is secured by or relates to such Property, in accordance with the terms of
any Lien or agreement upon or with respect to such Property or which must by its
terms or by applicable law be repaid out of the proceeds from such Asset
Disposition, and net of all contractually required distributions and payments
made to minority interest holders in Restricted Subsidiaries or joint ventures
as a result of such Asset Disposition.
"Non-Recourse Indebtedness" with respect to any Person means
Indebtedness of such Person for which (i) the sole legal recourse for collection
of principal and interest on such Indebtedness is against the specific property
identified in the instruments evidencing or securing such Indebtedness and such
property was acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within 90 days after the acquisition of such property
and (ii) no other assets of such Person may be realized upon in collection of
principal or interest on such Indebtedness. Indebtedness which is otherwise
Non-Recourse Indebtedness will not lose its character as Non-Recourse
Indebtedness because there is recourse to the borrower, any guarantor or any
other Person for (i) environmental warranties and indemnities, or (ii)
indemnities for and liabilities arising from fraud, misrepresentation,
misapplication or non-payment of rents, profits, insurance and condemnation
proceeds and other sums actually received by the borrower from secured assets to
be paid to the lender, waste and mechanics' liens.
"Notes" has the meaning provided in the Recitals.
"Paying Agent" means the Trustee or any successor paying
agent.
"Permitted Indebtedness" means (i) Indebtedness under Credit
Facilities which does not exceed $1.0 billion principal amount outstanding at
any one time; (ii) Indebtedness in respect of obligations of the Company and its
Subsidiaries to the trustees under indentures for debt securities; (iii)
intercompany debt obligations of the Company to any Restricted Subsidiary and of
any Restricted Subsidiary to the Company or any other Restricted Subsidiary;
provided, however, that any Indebtedness of any Restricted Subsidiary or the
Company owed to any Restricted Subsidiary or that ceases to be a Restricted
Subsidiary shall be deemed to be incurred and shall be treated as an incurrence
for purposes of the first paragraph of the covenant described under "Limitations
on Indebtedness" at the time the Restricted Subsidiary in question ceases to be
a Restricted Subsidiary; (iv) Indebtedness of the Company or any Restricted
19
Subsidiary under any Currency Agreements or Interest Protection Agreements in a
notional amount no greater than the payments due (at the time the related
Currency Agreement or Interest Protection Agreement is entered into) with
respect to the Indebtedness or currency being hedged; (v) Purchase Money
Indebtedness; (vi) Capitalized Lease Obligations; (vii) obligations for, pledge
of assets in respect of, and guaranties of, bond financings of political
subdivisions or enterprises thereof in the ordinary course of business; (viii)
Indebtedness secured only by office buildings owned or occupied by the Company
or any Restricted Subsidiary, which Indebtedness does not exceed $20 million
aggregate principal amount outstanding at any one time; (ix) Indebtedness under
warehouse lines of credit, repurchase agreements and Indebtedness secured by
mortgage loans and related assets of mortgage lending Subsidiaries in the
ordinary course of a mortgage lending business; and (x) Indebtedness of the
Company or any Restricted Subsidiary which, together with all other Indebtedness
under this clause (x), does not exceed $30 million aggregate principal amount
outstanding at any one time.
"Permitted Investment" means (i) Cash Equivalents; (ii) any
Investment in the Company or any Restricted Subsidiary or any Person that
becomes a Restricted Subsidiary as a result of such Investment or that is
consolidated or merged with or into, or transfers all or substantially all of
the assets of it or an operating unit or line of business to, the Company or a
Restricted Subsidiary; (iii) any receivables, loans or other consideration taken
by the Company or any Restricted Subsidiary in connection with any asset sale
otherwise permitted by the Indenture; (iv) Investments received in connection
with any bankruptcy or reorganization proceeding, or as a result of foreclosure,
perfection or enforcement of any Lien or any judgment or settlement of any
Person in exchange for or satisfaction of Indebtedness or other obligations or
other property received from such Person, or for other liabilities or
obligations of such Person created, in accordance with the terms of the
Indenture; (v) Investments in Currency Agreements or Interest Protection
Agreements described in the definition of Permitted Indebtedness; (vi) any loan
or advance to an executive officer or director of the Company or any Restricted
Subsidiary made in the ordinary course of business; provided, however, that any
such loan or advance exceeding $1 million shall have been approved by the Board
of Directors of the Company or a committee thereof consisting of disinterested
members; (vii) Investments in joint ventures in a Real Estate Business with
unaffiliated third parties in an aggregate amount at any time outstanding not to
exceed 10% of Consolidated Tangible Assets at such time; (viii) Investments in
interests in issuances of collateralized mortgage obligations, mortgages,
mortgage loan securities or other mortgage related assets; and (ix) Investments
in an aggregate amount outstanding not to exceed $100 million.
"Permitted Liens" means (i) Liens for taxes, assessments or
governmental or quasi-government charges or claims that (a) are not yet
delinquent, (b) are being contested in good faith by appropriate proceedings and
as to which appropriate reserves have been established or other provisions have
been made in accordance with GAAP, if required, or (c) encumber solely property
abandoned or in the process of being abandoned, (ii) statutory Liens of
20
landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other Liens imposed by law and arising in the ordinary course of
business and with respect to amounts that, to the extent applicable, either (a)
are not yet delinquent or (b) are being contested in good faith by appropriate
proceedings and as to which appropriate reserves have been established or other
provisions have been made in accordance with GAAP, if required, (iii) Liens
(other than any Lien imposed by the Employee Retirement Income Security Act of
1974, as amended) incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security, (iv) Liens incurred or deposits made to secure the
performance of tenders, bids, leases, statutory obligations, surety and appeal
bonds, development obligations, progress payments, government contacts, utility
services, developer's or other obligations to make on-site or off-site
improvements and other obligations of like nature (exclusive of obligations for
the payment of borrowed money but including the items referred to in the
parenthetical in clause (i)(a) of the definition of "Indebtedness"), in each
case incurred in the ordinary course of business of the Company and the
Restricted Subsidiaries, (v) attachment or judgment Liens not giving rise to a
Default or an Event of Default, (vi) easements, dedications, assessment district
or similar liens in connection with municipal or special district financing,
rights-of-way, restrictions, reservations, other similar charges, burdens, and
other similar charges or encumbrances not materially interfering with the
ordinary course of business of the Company and the Restricted Subsidiaries,
(vii) zoning restrictions, licenses, restrictions on the use of real property or
minor irregularities in title thereto, which do not materially impair the use of
such real property in the ordinary course of business of the Company and the
Restricted Subsidiaries, (viii) Liens securing Indebtedness incurred pursuant to
clause (viii) or (ix) of the definition of Permitted Indebtedness, (ix) Liens
securing Indebtedness of the Company or any Restricted Subsidiary permitted to
be incurred under the Indenture; provided, that the aggregate amount of all
consolidated Indebtedness of the Company and the Restricted Subsidiaries
(including, with respect to Capitalized Lease Obligations, the Attributable Debt
in respect thereof) secured by Liens (other than Non-Recourse Indebtedness and
Indebtedness incurred pursuant to clause (ix) of the definition of Permitted
Indebtedness) shall not exceed 40% of Consolidated Adjusted Tangible Assets at
any one time outstanding (after giving effect to the incurrence of such
Indebtedness and the use of the proceeds thereof), (x) Liens securing
Non-Recourse Indebtedness of the Company or any Restricted Subsidiary; provided,
that such Liens apply only to the property financed out of the net proceeds of
such Non-Recourse Indebtedness within 90 days after the incurrence of such
Non-Recourse Indebtedness, (xi) Liens securing Purchase Money Indebtedness;
provided that such Liens apply only to the property acquired, constructed or
improved with the proceeds of such Purchase Money Indebtedness within 90 days
after the incurrence of such Purchase Money Indebtedness, (xii) Liens on
property or assets of the Company or any Restricted Subsidiary securing
Indebtedness of the Company or any Restricted Subsidiary owing to the Company or
one or more Restricted Subsidiaries, (xiii) leases or subleases granted to
others not materially interfering with the ordinary course of business of the
Company and the Restricted Subsidiaries, (xiv) purchase money security interests
(including, without limitation, Capitalized Lease
21
Obligations); provided, that such Liens apply only to the Property acquired and
the related Indebtedness is incurred within 90 days after the acquisition of
such Property, (xv) any right of first refusal, right of first offer, option,
contract or other agreement to sell an asset; provided, that such sale is not
otherwise prohibited under the Indenture, (xvi) any right of a lender or lenders
to which the Company or a Restricted Subsidiary may be indebted to offset
against, or appropriate and apply to the payment of such, Indebtedness any and
all balances, credits, deposits, accounts or money of the Company or a
Restricted Subsidiary with or held by such lender or lenders or its Affiliates,
(xvii) any pledge or deposit of cash or property in conjunction with obtaining
surety, performance, completion or payment bonds and letters of credit or other
similar instruments or providing xxxxxxx money obligations, escrows or similar
purpose undertakings or indemnifications in the ordinary course of business of
the Company and its Restricted Subsidiaries, (xviii) Liens for homeowner and
property owner association developments and assessments, (xix) Liens securing
Refinancing Indebtedness; provided, that such Liens extend only to the assets
securing the Indebtedness being refinanced, and (xx) Liens incurred in the
ordinary course of business as security for the obligations of the Company and
its Restricted Subsidiaries with respect to indemnification in respect of title
insurance providers.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, incorporated or unincorporated
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Stock" of any Person means all Capital Stock of
such Person which has a preference in liquidation or with respect to the payment
of dividends.
"Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person, whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.
"Public Equity Offering" means an underwritten public offering
of Common Equity of the Company pursuant to an effective registration statement
filed under the Securities Act (excluding registration statements filed on Form
S-8 or any successor form).
"Purchase Money Indebtedness" means Indebtedness of the
Company or any Restricted Subsidiary incurred for the purpose of financing all
or any part of the purchase price, or the cost of construction or improvement,
of any property to be used in the ordinary course of business by the Company and
the Restricted Subsidiaries; provided, however, that (i) the aggregate principal
amount of such Indebtedness shall not exceed such purchase price or cost and
(ii) such Indebtedness shall be incurred no later than 90 days after the
acquisition of such property or completion of such construction or improvement.
"Qualified Stock" means Capital Stock of the Company other
than Disqualified Stock.
22
"Rating Agencies" shall mean (1) S&P and (2) Xxxxx'x.
"Real Estate Business" means homebuilding, housing
construction, real estate development or construction and related real estate
activities, including the provision of mortgage financing or title insurance.
"Refinancing Indebtedness" means Indebtedness (to the extent
not Permitted Indebtedness) that refunds, refinances or extends any Indebtedness
of the Company or any Restricted Subsidiary (to the extent not Permitted
Indebtedness) outstanding on the Issue Date or other Indebtedness (to the extent
not Permitted Indebtedness) permitted to be incurred by the Company or any
Restricted Subsidiary pursuant to the terms of this Indenture, but only to the
extent that (i) the Refinancing Indebtedness is subordinated to the Notes or the
Guarantees, as the case may be, to the same extent as the Indebtedness being
refunded, refinanced or extended, if at all, (ii) the Refinancing Indebtedness
is scheduled to mature either (a) no earlier than the Indebtedness being
refunded, refinanced or extended or (b) after the maturity date of the Notes,
(iii) the portion, if any, of the Refinancing Indebtedness that is scheduled to
mature on or prior to the maturity date of the Notes has a Weighted Average Life
to Maturity at the time such Refinancing Indebtedness is incurred that is equal
to or greater than the Weighted Average Life to Maturity of the portion of the
Indebtedness being refunded, refinanced or extended that is scheduled to mature
on or prior to the maturity date of the Notes, and (iv) such Refinancing
Indebtedness is in an aggregate principal amount that is equal to or less than
the aggregate principal amount then outstanding under the Indebtedness being
refunded, refinanced or extended.
"Registrar" means American Stock Transfer & Trust Company or
any successor registrar of the Notes.
"Registration Rights Agreement" means that certain
registration rights agreement by and among the Company, the Guarantors and the
Initial Purchasers dated as of April 11, 2002.
"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or any other distribution on Capital
Stock of the Company or any Restricted Subsidiary or any payment made to the
direct or indirect holders (in their capacities as such) of Capital Stock of the
Company or any Restricted Subsidiary (other than (a) dividends or distributions
payable solely in Qualified Stock and (b) in the case of Restricted
Subsidiaries, dividends or distributions payable to the Company or to a
Restricted Subsidiary); (ii) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company or any Restricted
Subsidiary (other than a payment made to the Company or any Restricted
Subsidiary); and (iii) any Investment (other than any Permitted Investment),
including any Investment in an Unrestricted Subsidiary (including by the
designation of a Subsidiary of the Company as an Unrestricted Subsidiary).
23
"Restricted Subsidiary" means any Subsidiary of the Company
which is not an Unrestricted Subsidiary.
"S&P" means Standard and Poor's Ratings Group or any successor
to its debt rating business.
"Securities" has the meaning provided in the Recitals.
"Significant Subsidiary" means any Subsidiary of the Company
which would constitute a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X under the Securities Act and the Exchange Act.
"Subsidiary" of any Person means any corporation or other
entity of which a majority of the Capital Stock having ordinary voting power to
elect a majority of the Board of Directors or other persons performing similar
functions is at the time directly or indirectly owned or controlled by such
Person.
"Successor" has the meaning set forth in Section 3.08.
"Supplemental Indenture" has the meaning provided in the
Preamble.
"Trustee" means the party named as such above until a
successor replaces such party in accordance with the applicable provisions of
this Indenture and thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means any Subsidiary of the Company
so designated by a resolution adopted by the Board of Directors of the Company
or a duly authorized committee thereof as provided below; provided that (a) the
holders of Indebtedness thereof do not have direct or indirect recourse against
the Company or any Restricted Subsidiary, and neither the Company nor any
Restricted Subsidiary otherwise has liability, for any payment obligations in
respect of such Indebtedness (including any undertaking, agreement or instrument
evidencing such Indebtedness), except, (i) in each case, to the extent that the
amount thereof constitutes a Restricted Payment permitted by the Indenture, (ii)
in the case of Non-Recourse Indebtedness, to the extent such recourse or
liability is for the matters discussed in the last sentence of the definition of
"Non-Recourse Indebtedness," or (iii) to the extent such Indebtedness is a
guarantee by such Subsidiary of Indebtedness of the Company or a Restricted
Subsidiary and (b) no holder of any Indebtedness of such Subsidiary shall have a
right to declare a default on such Indebtedness or cause the payment thereof to
be accelerated or payable prior to its stated maturity as a result of a default
on any Indebtedness of the Company or any Restricted Subsidiary. Subject to the
foregoing, the Board of Directors of the Company or a duly authorized committee
thereof may designate any Subsidiary to be an Unrestricted Subsidiary; provided,
however, that (i) the net amount (the "Designation Amount") then outstanding of
all
24
previous Investments by the Company and the Restricted Subsidiaries in such
Subsidiary will be deemed to be a Restricted Payment at the time of such
designation and will reduce the amount available for Restricted Payments under
Section 3.03 hereof, to the extent provided therein, (ii) the Company must be
permitted under Section 3.03 hereof to make the Restricted Payment deemed to
have been made pursuant to clause (i), and (iii) after giving effect to such
designation, no Default or Event of Default shall have occurred and be
continuing. In accordance with the foregoing, and not in limitation thereof,
Investments made by any Person in any Subsidiary of such Person prior to such
Person's merger with the Company or any Restricted Subsidiary (but not in
contemplation or anticipation of such merger) shall not be counted as an
Investment by the Company or such Restricted Subsidiary if such Subsidiary of
such Person is designated as an Unrestricted Subsidiary. The Board of Directors
of the Company or a duly authorized committee thereof may also redesignate an
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
(i) the Indebtedness of such Unrestricted Subsidiary as of the date of such
redesignation could then be incurred under Section 3.02 hereof and (ii)
immediately after giving effect to such redesignation and the incurrence of any
such additional Indebtedness, the Company and the Restricted Subsidiaries could
incur $1.00 of additional Indebtedness under Section 3.02(a) hereof. Any such
designation or redesignation by the Board of Directors of the Company or a
committee thereof will be evidenced to the Trustee by the filing with the
Trustee of a certified copy of the resolution of the Board of Directors of the
Company or a committee thereof giving effect to such designation or
redesignation and an Officers' Certificate certifying that such designation or
redesignation complied with the foregoing conditions and setting forth the
underlying calculations of such Officers' Certificate. The designation of any
Person as an Unrestricted Subsidiary shall be deemed to include a designation of
all Subsidiaries of such Person as Unrestricted Subsidiaries; provided, however,
that the ownership of the general partnership interest (or a similar member's
interest in a limited liability company) by an Unrestricted Subsidiary shall not
cause a Subsidiary of the Company of which more than 95% of the equity interest
is held by the Company or one or more Restricted Subsidiaries to be deemed an
Unrestricted Subsidiary.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness or portion thereof at any date, the number of years obtained by
dividing (i) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other required
payment of principal, including, without limitation, payment at final maturity,
in respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment
by (ii) the sum of all such payments described in clause (i)(a) above.
25
ARTICLE THREE
COVENANTS
Section 3.01. Repurchase of Notes upon Change of Control.
(a) In the event that there shall occur a Change of Control,
each Holder of Notes shall have the right, at such Holder's option, to require
the Company to purchase all or any part of such Holder's Notes on a date (the
"Repurchase Date") that is no later than 90 days after notice of the Change of
Control, at 101% of the principal amount thereof plus accrued interest to the
Repurchase Date.
(b) On or before the thirtieth day after any Change of
Control, the Company is obligated to mail, or cause to be mailed, to all Holders
of record of Notes a notice regarding the Change of Control and the repurchase
right. The notice shall state the Repurchase Date, the date by which the
repurchase right must be exercised, the price for the Notes and the procedure
which the Holder must follow to exercise such right. To exercise such right, the
Holder of such Note must deliver at least ten days prior to the Repurchase Date
written notice to the Company (or an agent designated by the Company for such
purpose) of the Holder's exercise of such right, together with the Note with
respect to which the right is being exercised, duly endorsed for transfer;
provided, however, that if mandated by applicable law, a Holder may be permitted
to deliver such written notice nearer to the Repurchase Date than may be
specified by the Company.
(c) The Company will comply with applicable law, including
Section 14(e) of the Exchange Act and Rule 14e-1 thereunder, if applicable, if
the Company is required to give a notice of right of repurchase as a result of a
Change of Control.
Section 3.02. Limitations on Indebtedness.
(a) Until the Notes are rated Investment Grade by both Rating
Agencies (after which time the following covenant will no longer be in effect),
the Company will not, and will not cause or permit any Restricted Subsidiary,
directly or indirectly, to, create, incur, assume, become liable for or
guarantee the payment of (collectively, an "incurrence") any Indebtedness
(including Acquired Indebtedness) unless, after giving effect thereto and the
application of the proceeds therefrom, the Consolidated Fixed Charge Coverage
Ratio on the date thereof would be at least 2.0 to 1.0.
(b) Notwithstanding the foregoing, the provisions of this
Supplemental Indenture will not prevent the incurrence of: (i) Permitted
Indebtedness, (ii) Refinancing Indebtedness, (iii) Non-Recourse Indebtedness,
(iv) any Guarantee of Indebtedness of the Company
26
represented by the Notes and (v) any guarantee of Indebtedness incurred under
Credit Facilities in compliance with this Indenture.
(c) For purposes of determining compliance with this covenant,
in the event that an item of Indebtedness may be incurred through the first
paragraph of this covenant or by meeting the criteria of one or more of the
types of Indebtedness described in the second paragraph of this covenant (or the
definitions of the terms used therein), the Company, in its sole discretion, (i)
may classify such item of Indebtedness under and comply with either of such
paragraphs (or any of such definitions), as applicable, (ii) may classify and
divide such item of Indebtedness into more than one of such paragraphs (or
definitions), as applicable, and (iii) may elect to comply with such paragraphs
(or definitions), as applicable, in any order.
(d) The Company will not, and will not cause or permit any
Guarantor to, directly or indirectly, in any event incur any Indebtedness that
purports to be by its terms (or by the terms of any agreement governing such
Indebtedness) subordinated to any other Indebtedness of the Company or of such
Guarantor, as the case may be, unless such Indebtedness is also by its terms (or
by the terms of any agreement governing such Indebtedness) made expressly
subordinated to the Notes or the Guarantee of such Guarantor, as the case may
be, to the same extent and in the same manner as such Indebtedness is
subordinated to such other Indebtedness of the Company or such Guarantor, as the
case may be.
Section 3.03. Limitations on Restricted Payments.
(a) Until the Notes are rated Investment Grade by both Rating
Agencies (after which time the following covenant will no longer be in effect),
the Company will not, and will not cause or permit any Restricted Subsidiary to,
directly or indirectly, make any Restricted Payment unless:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of or immediately after giving effect to such
Restricted Payment;
(ii) immediately after giving effect to such Restricted
Payment, the Company could incur at least $1.00 of Indebtedness
pursuant to Section 3.02(a) hereof; and
(iii) immediately after giving effect to such Restricted
Payment, the aggregate amount of all Restricted Payments (including the
Fair Market Value of any non-cash Restricted Payment) declared or made
after the Issue Date does not exceed the sum of (a) 50% of the
Consolidated Net Income of the Company on a cumulative basis during the
period (taken as one accounting period) from and including April 1,
1998 and ending on the last day of the Company's fiscal quarter
immediately preceding the date of such Restricted Payment (or in the
event such Consolidated Net Income shall be a deficit, minus 100% of
such deficit), plus (b) 100% of the aggregate net cash
27
proceeds of and the fair market value of Property received by the
Company from (1) any capital contribution to the Company after June 9,
1997 or any issue or sale after June 9, 1997 of Qualified Stock (other
than to any Subsidiary of the Company) and (2) the issue or sale after
June 9, 1997 of any Indebtedness or other securities of the Company
convertible into or exercisable for Qualified Stock of the Company that
have been so converted or exercised, as the case may be, plus (c) $86.0
million, which is equal to the aggregate principal amount of the
Company's 6-7/8% Convertible Subordinated Notes due 2002 that were
converted into the Company's Common Equity prior to the Issue Date,
plus (d) in the case of the disposition or repayment of any Investment
constituting a Restricted Payment made after the June 9, 1997, an
amount (to the extent not included in the calculation of the
Consolidated Net Income referred to in (a)) equal to the lesser of (x)
the return of capital with respect to such Investment (including by
dividend, distribution or sale of Capital Stock) and (y) the amount of
such Investment that was treated as a Restricted Payment, in either
case, less the cost of the disposition or repayment of such Investment
(to the extent not included in the calculation of the Consolidated Net
Income referred to in (a)), plus (e) with respect to any Unrestricted
Subsidiary that is redesignated as a Restricted Subsidiary after June
9, 1997 in accordance with the definition of Unrestricted Subsidiary
(so long as the designation of such Subsidiary as an Unrestricted
Subsidiary was treated as a Restricted Payment made after June 9, 1997
and only to the extent not included in the calculation of the
Consolidated Net Income referred to in (a)), an amount equal to the
lesser of (x) the proportionate interest of the Company or a Restricted
Subsidiary in an amount equal to the excess of (I) the total assets of
such Subsidiary, valued on an aggregate basis at the lesser of book
value and Fair Market Value thereof, over (II) the total liabilities of
such Subsidiary, determined in accordance with GAAP, and (y) the
Designation Amount at the time of such Subsidiary's designation as an
Unrestricted Subsidiary, plus (f) $50 million minus (g) the aggregate
amount of all Restricted Payments (other than Restricted Payments
referred to in clause (C) of the immediately succeeding paragraph) made
after June 9, 1997 through the Issue Date.
(b) Clauses (ii) and (iii) of paragraph (a) will not prohibit:
(A) the payment of any dividend within 60 days of its declaration if such
dividend could have been made on the date of its declaration without violation
of the provisions of this Indenture; (B) the repurchase, redemption or
retirement of any shares of Capital Stock of the Company in exchange for, or out
of the net proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of, other shares of Qualified Stock; and (C) the
purchase, redemption or other acquisition, cancellation or retirement for value
of Capital Stock, or options, warrants, equity appreciation rights or other
rights to purchase or acquire Capital Stock, of the Company or any Subsidiary
held by officers or employees or former officers or employees of the Company or
any Subsidiary (or their estates or beneficiaries under their estates) not to
exceed $20 million in the aggregate since the Issue Date; provided, however,
that each Restricted Payment described
28
in clauses (A) and (B) of this sentence shall be taken into account for purposes
of computing the aggregate amount of all Restricted Payments pursuant to clause
(iii) of paragraph (a).
(c) For purposes of determining the aggregate and
permitted amounts of Restricted Payments made, the amount of any guarantee of
any Investment in any Person that was initially treated as a Restricted Payment
and which was subsequently terminated or expired, net of any amounts paid by the
Company or any Restricted Subsidiary in respect of such guarantee, shall be
deducted.
(d) In determining the "fair market value of Property"
for purposes of clause (iii) of the paragraph (a), Property other than cash,
Cash Equivalents and Marketable Securities shall be deemed to be equal in value
to the "equity value" of the Capital Stock or other securities issued in
exchange therefor. The "equity value" of such Capital Stock or other securities
shall be equal to (i) the number of shares of Common Equity issued in the
transaction (or issuable upon conversion or exercise of the Capital Stock or
other securities issued in the transaction) multiplied by the closing sale price
of the Common Equity on its principal market on the date of the transaction
(less, in the case of Capital Stock or other securities which require the
payment of consideration at the time of conversion or exercise, the aggregate
consideration payable thereupon) or (ii) if the Common Equity is not then traded
on the
New York Stock Exchange, American Stock Exchange or Nasdaq National
Market, or if the Capital Stock or other securities issued in the transaction do
not consist of Common Equity (or Capital Stock or other securities convertible
into or exercisable for Common Equity), the value of such Capital Stock or other
securities as determined by a nationally recognized investment banking firm
retained by the Board of Directors of the Company.
Section 3.04. Limitations on Transactions with Affiliates.
(a) Until the Notes are rated Investment Grade by both
Rating Agencies (after which time the following covenant will no longer be in
effect), the Company will not, and will not cause or permit any Restricted
Subsidiary to, make any loan, advance, guarantee or capital contribution to, or
for the benefit of, or sell, lease, transfer or otherwise dispose of any
property or assets to, or for the benefit of, or purchase or lease any property
or assets from, or enter into or amend any contract, agreement or understanding
with, or for the benefit of, any Affiliate of the Company or any Affiliate of
any of the Company's Subsidiaries or any holder of 10% or more of the Common
Equity of the Company (including any Affiliates of such holders), in a single
transaction or series of related transactions (each, an "Affiliate
Transaction"), except for any Affiliate Transaction the terms of which are at
least as favorable as the terms which could be obtained by the Company or such
Restricted Subsidiary, as the case may be, in a comparable transaction made on
an arm's length basis with Persons who are not such a holder, an Affiliate of
such a holder or an Affiliate of the Company or any of the Company's
Subsidiaries.
29
(b) In addition, the Company will not, and will not cause
or permit any Restricted Subsidiary to, enter into an Affiliate Transaction
unless (i) with respect to any such Affiliate Transaction involving or having a
value of more than $10 million, the Company shall have (x) obtained the approval
of a majority of the Board of Directors of the Company and (y) either obtained
the approval of a majority of the Company's disinterested directors or obtained
an opinion of a qualified independent financial advisor to the effect that such
Affiliate Transaction is fair to the Company or such Restricted Subsidiary, as
the case may be, from a financial point of view and (ii) with respect to any
such Affiliate Transaction involving or having a value of more than $50 million,
the Company shall have (x) obtained the approval of a majority of the Board of
Directors of the Company and (y) delivered to the Trustee an opinion of a
qualified independent financial advisor to the effect that such Affiliate
Transaction is fair to the Company or such Restricted Subsidiary, as the case
may be, from a financial point of view.
(c) Notwithstanding the foregoing, an Affiliate Transaction
will not include (i) any contract, agreement or understanding with, or for the
benefit of, or plan for the benefit of employees of the Company or its
Subsidiaries generally (in their capacities as such) that has been approved by
the Board of Directors of the Company, (ii) Capital Stock issuances to
directors, officers and employees of the Company or its Subsidiaries pursuant to
plans approved by the stockholders of the Company, (iii) any Restricted Payment
otherwise permitted under Section 3.03, (iv) any transaction between or among
the Company and one or more Restricted Subsidiaries or between or among
Restricted Subsidiaries (provided, however, no such transaction shall involve
any other Affiliate of the Company (other than an Unrestricted Subsidiary to the
extent the applicable amount constitutes a Restricted Payment permitted by this
Indenture)) and (v) any transaction between one or more Restricted Subsidiaries
and one or more Unrestricted Subsidiaries where all of the payments to, or other
benefits conferred upon, such Unrestricted Subsidiaries are substantially
contemporaneously dividended, or otherwise distributed or transferred without
charge, to the Company or a Restricted Subsidiary.
Section 3.05. Limitations on Dispositions of Assets.
Until the Notes are rated Investment Grade by both Rating
Agencies (after which time the following covenant will no longer be in effect),
the Company will not, and will not cause or permit any Restricted Subsidiary to,
make any Asset Disposition unless (x) the Company (or such Restricted
Subsidiary, as the case may be) receives consideration at the time of such Asset
Disposition at least equal to the Fair Market Value thereof, and (y) not less
than 70% of the consideration received by the Company (or such Restricted
Subsidiary, as the case may be) is in the form of cash, Cash Equivalents and
Marketable Securities. The amount of any Indebtedness (other than any
Indebtedness subordinated to the Notes) of the Company or any Restricted
Subsidiary that is actually assumed by the transferee in such Asset Disposition
shall be deemed to be consideration required by clause (y) above for purposes of
determining the percentage of such consideration received by the Company or the
Restricted Subsidiaries.
30
The Net Cash Proceeds of an Asset Disposition shall, within one year, at the
Company's election, (a) be used by the Company or a Restricted Subsidiary in the
business of the construction and sale of homes conducted by the Company and the
Restricted Subsidiaries or any other business of the Company or a Restricted
Subsidiary existing at the time of such Asset Disposition or (b) to the extent
not so used, be applied to make a Net Cash Proceeds Offer for the Notes and, if
the Company or a Restricted Subsidiary elects or is required to do so, repay,
purchase or redeem any other unsubordinated Indebtedness (on a pro rata basis if
the amount available for such repayment, purchase or redemption is less than the
aggregate amount of (i) the principal amount of the Notes tendered in such Net
Cash Proceeds Offer and (ii) the lesser of the principal amount, or accreted
value, of such other unsubordinated Indebtedness, plus, in each case accrued
interest to the date of repayment, purchase or redemption) at 100% of the
principal amount or accreted value thereof, as the case may be, plus accrued
interest to the date of repurchase or repayment. Notwithstanding the foregoing,
(A) the Company will not be required to apply such Net Cash Proceeds to the
repurchase of Notes in accordance with clause (b) of the preceding sentence
except to the extent that such Net Cash Proceeds, together with the aggregate
Net Cash Proceeds of prior Asset Dispositions (other than those so used) which
have not been applied in accordance with this provision and as to which no prior
Net Cash Proceeds Offer shall have been made, exceed 5% of Consolidated Tangible
Assets and (B) in connection with any Asset Disposition, the Company and the
Restricted Subsidiaries will not be required to comply with the requirements of
clause (y) of the first sentence of this paragraph to the extent that the
aggregate non-cash consideration received in connection with such Asset
Disposition, together with the sum of all non-cash consideration received in
connection with all prior Asset Dispositions that has not yet been converted
into cash, does not exceed 5% of Consolidated Tangible Assets; provided,
however, that when any non-cash consideration is converted into cash, such cash
shall constitute Net Cash Proceeds and be subject to the preceding sentence.
Section 3.06. Limitations on Liens.
The Company will not, and will not cause or permit any
Restricted Subsidiary to, create, incur, assume or suffer to exist any Liens,
other than Permitted Liens, on any of its Property, or on any shares of Capital
Stock or Indebtedness of any Restricted Subsidiary, unless contemporaneously
therewith or prior thereto all payments due under this Indenture and the Notes
are secured on an equal and ratable basis with the obligation or liability so
secured until such time as such obligation or liability is no longer secured by
a Lien.
Section 3.07. Limitations on Restrictions Affecting Restricted Subsidiaries.
The Company will not, and will not cause or permit any
Restricted Subsidiary to, create, assume or otherwise cause or suffer to exist
or become effective any consensual
31
encumbrance or restriction (other than encumbrances or restrictions imposed by
law or by judicial or regulatory action or by provisions of leases and other
agreements that restrict the assignability thereof) on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or any other interest or participation in, or measured by, its
profits, owned by the Company or any other Restricted Subsidiary, or pay
interest on or principal of any Indebtedness owed to the Company or any other
Restricted Subsidiary, (ii) make loans or advances to the Company or any other
Restricted Subsidiary, or (iii) transfer any of its properties or assets to the
Company or any other Restricted Subsidiary, except for (a) encumbrances or
restrictions existing under or by reason of applicable law, (b) covenants or
restrictions contained in Indebtedness in effect on the date of this Indenture
as such covenants or restrictions are in effect on such date, (c) any
restrictions or encumbrances arising under Acquired Indebtedness; provided, that
such encumbrance or restriction applies only to either the assets that were
subject to the restriction or encumbrance at the time of the acquisition or the
obligor on such Indebtedness and its Subsidiaries, (d) any restrictions or
encumbrances arising in connection with Refinancing Indebtedness; provided,
however, that any restrictions and encumbrances of the type described in this
clause (d) that arise under such Refinancing Indebtedness shall not be
materially more restrictive than those under the agreement creating or
evidencing the Indebtedness being refunded, refinanced, replaced or extended,
(e) any Permitted Lien, or any other agreement restricting the sale or other
disposition of property, securing Indebtedness permitted by this Indenture if
such Permitted Lien or agreement does not expressly restrict the ability of a
Subsidiary of the Company to pay dividends or make or repay loans or advances
prior to default thereunder, (f) reasonable and customary borrowing base
covenants set forth in agreements evidencing Indebtedness otherwise permitted by
this Indenture, (g) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of the Company or any Restricted
Subsidiary, and (h) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or disposition of all
or substantially all of the Capital Stock or assets of such Restricted
Subsidiary pending the closing of such sale or disposition.
Section 3.08. Limitations on Mergers, Consolidations and Sales of Assets.
Neither the Company nor any Guarantor will consolidate or
merge with or into, or sell, lease, convey or otherwise dispose of all or
substantially all of its assets (including, without limitation, by way of
liquidation or dissolution), or assign any of its obligations under the Notes,
the Guarantees or this Indenture (as an entirety or substantially in one
transaction or in a series of related transactions), to any Person (in each case
other than in a transaction in which the Company or a Restricted Subsidiary is
the survivor of a consolidation or merger, or the transferee in a sale, lease,
conveyance or other disposition) unless: (i) the Person formed by or surviving
such consolidation or merger (if other than the Company or the Guarantor, as the
case may be), or to which such sale, lease, conveyance or other disposition or
assignment will
32
be made (collectively, the "Successor"), is a corporation or other legal entity
organized and existing under the laws of the United States or any state thereof
or the District of Columbia, and the Successor assumes by supplemental indenture
in a form reasonably satisfactory to the Trustee all of the obligations of the
Company or the Guarantor, as the case may be, under the Notes or a Guarantee, as
the case may be, and the Indenture, (ii) immediately after giving effect to such
transaction, no Default or Event of Default has occurred and is continuing,
(iii) immediately after giving effect to such transaction and the use of any net
proceeds therefrom, on a pro forma basis, the Consolidated Net Worth of the
Company or the Successor (in the case of a transaction involving the Company),
as the case may be, would be at least equal to the Consolidated Net Worth of the
Company immediately prior to such transaction (exclusive of any adjustments to
Consolidated Net Worth attributable to transaction costs) less any amount
treated as a Restricted Payment in connection with such transaction in
accordance with this Indenture and (iv) unless prior to such transaction the
Notes are rated Investment Grade by both Rating Agencies (after which this
clause (iv) shall not apply), immediately after giving effect to such
transaction, the Company could incur at least $1.00 of Indebtedness pursuant to
Section 3.02(a) hereof. The foregoing provisions shall not apply to (i) a
transaction involving the sale or disposition of Capital Stock of a Guarantor,
or the consolidation or merger of a Guarantor, or the sale, lease, conveyance or
other disposition of all or substantially all of the assets of a Guarantor, that
in any such case results in such Guarantor being released from its Guarantee
pursuant to the Indenture or (ii) a transaction the purpose of which is to
change the state of incorporation of the Company or any Guarantor.
Section 3.09. Reports to Holders of Notes.
The Company will file with the Commission the annual reports
and the information, documents and other reports required to be filed pursuant
to Section 13 or 15(d) of the Exchange Act. The Company will file with the
Trustee and mail to each Holder of record of Notes such reports, information and
documents within 15 days after it files them with the Commission. In the event
that the Company is no longer subject to these periodic requirements of the
Exchange Act, it will nonetheless continue to file reports with the Commission
and the Trustee and mail such reports to each Holder of Notes as if it were
subject to such reporting requirements. Regardless of whether the Company is
required to furnish such reports to its stockholders pursuant to the Exchange
Act, the Company will cause its consolidated financial statements and a
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" written report, similar to those that would have been required to
appear in annual or quarterly reports, to be delivered to Holders of Notes.
33
ARTICLE FOUR
MISCELLANEOUS
Section 4.01. Governing Law.
The laws of the State of
New York shall govern this
Supplemental Indenture, the Securities of each Series and the Guarantees.
Section 4.02. No Adverse Interpretation of Other Agreements.
This Supplemental Indenture may not be used to interpret
another indenture, loan or debt agreement of the Company or a Subsidiary. Any
such indenture, loan or debt agreement may not be used to interpret this
Supplemental Indenture.
Section 4.03. No Recourse Against Others.
All liability described in paragraph 13 of the Initial Note
and paragraph 12 of the Exchange Note of any director, officer, employee or
stockholder, as such, of the Company or any Guarantor is waived and released.
Section 4.04. Successors and Assigns.
All covenants and agreements of the Company and the Guarantors
in this Supplemental Indenture and the Notes shall bind its successors and
assigns. All agreements of the Trustee in this Supplemental Indenture shall bind
its successors and assigns.
Section 4.05. Duplicate Originals.
The parties may sign any number of copies of this Supplemental
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
Section 4.06. Severability.
In case any one or more of the provisions contained in this
Supplemental Indenture or in the Notes shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Supplemental
Indenture or of the Notes.
[Signature Pages Follow]
IN WITNESS WHEREOF, the parties have caused this Supplemental
Indenture to be duly executed, all as of the date first above written.
X.X. XXXXXX, INC.
By: /s/ XXXXXX X. XXXXXX
---------------------------------------------
Xxxxxx X. Xxxxxx
Executive Vice President, Treasurer and
Chief Financial Officer
S-1
AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Trustee
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
S-2
GUARANTORS:
C. XXXXXXX XXXXXX BUILDERS, INC.
CHI CONSTRUCTION COMPANY
CHTEX OF TEXAS, INC.
CONTINENTAL HOMES, INC.
CONTINENTAL HOMES OF FLORIDA, INC.
CONTINENTAL RESIDENTIAL, INC.
X.X. XXXXXX, INC. - BIRMINGHAM
X.X. XXXXXX, INC. - CHICAGO
X.X. XXXXXX, INC. - DENVER
X.X. XXXXXX, INC. - XXXXX-XXXXX
X.X. XXXXXX, INC. - GREENSBORO
X.X. XXXXXX, INC. - JACKSONVILLE
X.X. XXXXXX, INC. - LOUISVILLE
X.X. XXXXXX, INC. - MINNESOTA
X.X. XXXXXX, INC. - NEW JERSEY
X.X. XXXXXX, INC. - PORTLAND
X.X. XXXXXX, INC. - SACRAMENTO
X.X. XXXXXX, INC. - TORREY
X.X. XXXXXX LOS ANGELES HOLDING COMPANY, INC.
X.X. XXXXXX SAN DIEGO HOLDING COMPANY, INC.
DRH CAMBRIDGE HOMES, INC.
DRH CONSTRUCTION, INC.
DRH REGREM II, INC.
DRH REGREM III, INC.
DRH REGREM IV, INC.
DRH REGREM V, INC.
DRH SOUTHWEST CONSTRUCTION, INC.
DRH TITLE COMPANY OF COLORADO, INC.
DRH TUCSON CONSTRUCTION, INC.
DRHI, INC.
KDB HOMES, INC.
XXXXXXX I, LTD.
XXXXXXX VIII, LTD.
XXXXXXX IX, INC.
XXXXXXX X, INC.
By: /s/ XXXXXX X. XXXXXX
-------------------------------------------------
Xxxxxx X. Xxxxxx
Treasurer
First Supplemental Indenture S-3
CH INVESTMENTS OF TEXAS, INC.
XXXXXXX II, LTD.
By: /s/ XXXXXXX XXXX
------------------------------------------------
Xxxxxxx Xxxx
President
First Supplemental Indenture S-4
CONTINENTAL HOMES OF TEXAS, L.P.
By: CHTEX of Texas, Inc., its general partner
By: /s/ XXXXXX X. XXXXXX
-------------------------------------------
Xxxxxx X. Xxxxxx, Treasurer
X.X. XXXXXX MANAGEMENT COMPANY, LTD.
X.X. XXXXXX - EMERALD, LTD.
X.X. XXXXXX - TEXAS, LTD.
DRH REGREM VII, LP
By: Xxxxxxx I, Ltd., its general partner
By: /s/ XXXXXX X. XXXXXX
-------------------------------------------
Xxxxxx X. Xxxxxx
Treasurer
SGS COMMUNITIES AT GRANDE QUAY, LLC
By: Xxxxxxx IX, Inc., a member
By: /s/ XXXXXX X. XXXXXX
-------------------------------------------
Xxxxxx X. Xxxxxx
Treasurer
and
By: Xxxxxxx X, Inc., a member
By: /s/ XXXXXX X. XXXXXX
-------------------------------------------
Xxxxxx X. Xxxxxx
Treasurer
DRH CAMBRIDGE HOMES, LLC
DRH REGREM VIII, LLC
By: X.X. Xxxxxx, Inc. - Chicago, a member
By: /s/ XXXXXX X. XXXXXX
-------------------------------------------
Xxxxxx X. Xxxxxx
Treasurer
First Supplemental Indenture S-5
ALLEGRA, LLC
APLAM, LLC
WESTERN PACIFIC HOUSING CO.
WESTERN PACIFIC HOUSING-ANTIGUA, LLC
WESTERN PACIFIC HOUSING-AVIARA, L.P.
WESTERN PACIFIC HOUSING-BOARDWALK, LLC
WESTERN PACIFIC HOUSING-BROADWAY, LLC
WESTERN PACIFIC HOUSING-CANYON PARK, LLC
WESTERN PACIFIC HOUSING-CARMEL, LLC
WESTERN PACIFIC HOUSING-XXXXXXXX, LLC
WESTERN PACIFIC HOUSING-COMMUNICATIONS HILL, LLC
WESTERN PACIFIC HOUSING-CREEKSIDE, LLC
WESTERN PACIFIC HOUSING-XXXXXX CITY, L.P.
WESTERN PACIFIC HOUSING-LOMAS VERDES, LLC
WESTERN PACIFIC HOUSING-LOST HILLS PARK, LLC
WESTERN PACIFIC HOUSING-XXXXXXXXX CANYON, LLC
WESTERN PACIFIC HOUSING-MOUNTAINGATE, L.P.
WESTERN PACIFIC HOUSING-NORCO ESTATES, LLC
WESTERN PACIFIC HOUSING-OSO, L.P.
WESTERN PACIFIC HOUSING-PARK AVENUE EAST, LLC
WESTERN PACIFIC HOUSING-PARK AVENUE WEST, LLC
WESTERN PACIFIC HOUSING-PLAYA VISTA, LLC
WESTERN PACIFIC HOUSING-ROBINHOOD RIDGE, LLC
WESTERN PACIFIC HOUSING-SANTA FE, LLC
WESTERN PACIFIC HOUSING-SCRIPPS II, LLC
WESTERN PACIFIC HOUSING-SCRIPPS, L.P.
WESTERN PACIFIC HOUSING-SEACOVE, L.P.
WESTERN PACIFIC HOUSING-STUDIO 528, LLC
WESTERN PACIFIC HOUSING-TERRA BAY DUETS, LLC
WESTERN PACIFIC HOUSING-TORRANCE, LLC
WESTERN PACIFIC HOUSING-TORREY COMMERCIAL, LLC
WESTERN PACIFIC HOUSING-XXXXXX XXXXXXX, LLC
WESTERN PACIFIC HOUSING-TORREY MULTI-FAMILY, LLC
WESTERN PACIFIC HOUSING-TORREY VILLAGE CENTER, LLC
WESTERN PACIFIC HOUSING-VINEYARD TERRACE, LLC
WESTERN PACIFIC HOUSING-WINDEMERE, LLC
WESTERN PACIFIC HOUSING-WINDFLOWER, L.P.
WPH-CAMINO XXXX, LLC
WPH-HPH, LLC
By: LAMCO Housing, Inc.,
its Member or General Partner
By: /s/ XXXXXX X. XXXXXX
-------------------------------------------
Xxxxxx X. Xxxxxx
Vice President
First Supplemental Indenture S-6
XXXXXXX HOMES OF ARIZONA LLC
SHA CONSTRUCTION LLC
By: SRHI LLC,
its Member
By: SLHR of Nevada, Inc.,
its Member
By: /s/ XXXXXX X. XXXXXX
-----------------------------
Xxxxxx X. Xxxxxx
Vice President
HPH HOMEBUILDERS 2000 X.X.
XXXXXX GP LLC
By: WPH-HPH, LLC,
its General Partner or Member
By: LAMCO Housing, Inc.,
its Member
By: /s/ XXXXXX X. XXXXXX
-----------------------------
Xxxxxx X. Xxxxxx
Vice President
AP LHI, INC.
AP WESTERN GP CORPORATION
AP WP OPERATING CORPORATION
LAMCO HOUSING, INC.
MELODY HOMES, INC.
MELMORT CO.
XXXXXXX HOMES OF CALIFORNIA, INC.
XXXXXXX HOMES OF OREGON, INC.
XXXXXXX HOMES OF WASHINGTON, INC.
XXXXXXX MORTGAGE, INC.
XXXXXXX REALTY HAWAII, INC.
XXXXXXX REALTY/MAUI, INC.
SHLR OF CALIFORNIA, INC.
SHLR OF COLORADO, INC.
SHLR OF NEVADA, INC.
SHLR OF UTAH, INC.
SHLR OF WASHINGTON, INC.
VERTICAL CONSTRUCTION CORPORATION
WESTERN PACIFIC FUNDING, INC.
WESTERN PACIFIC HOUSING MANAGEMENT, INC.
WESTERN PACIFIC HOUSING, INC.
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------------
Xxxxxx X. Xxxxxx
Vice President
First Supplemental Indenture S-7
X.X. XXXXXX-XXXXXXX HOMES, LLC
By: Vertical Construction Corporation,
its Manager
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------------
Xxxxxx X. Xxxxxx
Vice President
SRHI LLC
By: SHLR of Nevada, Inc.,
its Member
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------------
Xxxxxx X. Xxxxxx
Vice President
SSHI LLC
By: SHLR of Washington, Inc.,
its Member
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------------
Xxxxxx X. Xxxxxx
Vice President
WESTERN PACIFIC HOUSING-COPPER CANYON, LLC
WESTERN PACIFIC HOUSING-PACIFIC PARK II, LLC
WESTERN PACIFIC HOUSING-POINSETTIA, L.P.
WESTERN PACIFIC HOUSING-DEL XXXXX, LLC
By: AP Western GP Corporation,
its Member or General Partner
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------------
Xxxxxx X. Xxxxxx
Vice President
WESTERN PACIFIC HOUSING-RIVER RIDGE, LLC
By: AP LHI, Inc.,
its Member
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------------
Xxxxxx X. Xxxxxx
Vice President
AP WP PARTNERS, L.P.
By: AP WP Operating Corporation,
its General Partner
By: /s/ XXXXXX X. XXXXXX
-----------------------------------------------
Xxxxxx X. Xxxxxx
Vice President
First Supplemental Indenture S-8
EXHIBIT A
NO. CUSIP NO.:
-------
8.5% SENIOR NOTES DUE 2012
X.X. XXXXXX, INC.
A DELAWARE CORPORATION
promises to pay to
or registered assigns
the principal sum of Dollars on April 15, 2012
8.5% Senior Notes Due 2012
Interest Payment Dates: April 15 and October 15, commencing October 15, 2002.
Record Dates: April 1 and October 1.
Authenticated: Dated:
X.X. XXXXXX, INC.
[Seal]
By
----------------------------------
Title:
By
----------------------------------
Title:
American Stock Transfer & Trust Company, as
Trustee, certifies that this is one of the Notes
referred to in the within mentioned Indenture.
By:
-----------------------------------------
Authorized Signatory
A-1
X.X. XXXXXX, INC.
8.5% SENIOR NOTES DUE 2012
1. Interest.
X.X. XXXXXX, INC. (the "Company"), a Delaware corporation,
promises to pay interest on the principal amount of this Note at the rate per
annum shown above. The Company will pay interest semiannually on April 15 and
October 15 of each year, commencing October 15, 2002, until the principal is
paid or made available for payment. Interest on the Notes will accrue from the
most recent date to which interest has been paid or duly provided for or, if no
interest has been paid, from April 11, 2002, provided that, if there is no
existing default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
interest payment date, interest shall accrue from such interest payment date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest, if any, which will be paid on such special payment date to
Holders of record on such special record date as may be fixed by the Company) to
the persons who are registered Holders of Notes at the close of business on the
April 1 and October 1 immediately preceding the interest payment date. Holders
must surrender Notes to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
3. Paying Agent and Registrar.
Initially, American Stock Transfer & Trust Company (the
"Trustee") will act as Paying Agent and Registrar. The Company may change or
appoint any Paying Agent, Registrar or co-Registrar without notice. The Company
or any of its Subsidiaries or any of their Affiliates may act as Paying Agent,
Registrar or co-Registrar.
4. Indenture.
The Company issued the Notes under an Indenture dated as of
April 11, 2002, as supplemented ("Indenture"), among the Company, the Guarantors
and the Trustee. The terms of the Notes and the Guarantees include those stated
in the Indenture and those made part of the Indenture (including those terms set
forth in the Authorizing Resolution or supplemental indenture pertaining to the
Securities of the Series of which this Note is a part) by reference to the Trust
Indenture Act of 1939 ("TIA") as in effect on the date of the Indenture. The
Notes and the Guarantees are subject to all such terms, and Holders are referred
to the Indenture and the Act for a statement of them. Capitalized terms not
defined herein have the meanings given to those terms in the Indenture. The
Notes include the Initial Notes and the
A-2
Exchange Notes issued in exchange for the Initial Notes pursuant to the
Registration Rights Agreement (as hereinafter defined).
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and the applicable Authorizing
Resolution or supplemental indenture. Requests may be made to: X.X. Xxxxxx,
Inc., 0000 Xxxxxxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxx 00000, Attention: Chief
Financial Officer.
5. Optional Redemption.
Except as set forth below, the Notes are not redeemable prior
to April 15, 2007. Thereafter, the Notes will be redeemable in whole or in part,
from time to time at the option of the Company, at the following redemption
prices (expressed as percentages of principal amount) if redeemed during the
twelve month period beginning with April 15 of the year indicated below, in each
case together with accrued and unpaid interest (including any Liquidated
Damages), if any, thereon to the date of redemption:
Year Percentage
---- ----------
2007...................................... 104.250%
2008...................................... 102.833%
2009...................................... 101.417%
2010 and thereafter....................... 100.000%
In addition, the Company may redeem Notes, at any time and
from time to time, on or prior to April 15, 2005, with the net cash proceeds of
one or more Public Equity Offerings by the Company, at a redemption price equal
to 108.5% of the principal amount of such Notes, plus accrued and unpaid
interest (including any Liquidated Damages), if any, to the date of redemption;
provided, that at least 65% of the aggregate principal amount of Notes,
excluding any Notes held by the Company or any of its Affiliates, remains
outstanding immediately after the occurrence of such redemption. Notice of any
such redemption must be given within 60 days after the date of the closing of
the relevant Public Equity Offering.
Selection of the Notes or portions thereof for redemption
pursuant to the foregoing shall be made by the Trustee only on a pro rata basis
or on as nearly a pro rata basis as is practicable (subject to the procedures of
The Depository Trust Company), unless such method is otherwise prohibited.
Notice of redemption will be mailed at least 30 days but not more than 60 days
before the redemption date to each Holder whose Notes are to be redeemed at the
registered address of such Holder. Notes in denominations larger than $1,000 may
be redeemed in part. On and after the redemption date, interest ceases to accrue
on the Notes or portions thereof called for redemption, provided that if the
Company shall default in the payment of such Notes at the redemption price
together with accrued interest, interest shall continue to accrue at the rate
borne by the Notes.
A-3
6. Registration Rights Agreement.
The Holder of this Note is entitled to the benefits of a
Registration Rights Agreement, dated as of April 11, 2002, among the Company,
the Guarantors and the Initial Purchasers named therein (as such may be amended
from time to time, the "Registration Rights Agreement"). Capitalized terms used
in this subsection but not defined herein have the meanings assigned to them in
the Registration Rights Agreement.
If (i) within 90 days after the Issue Date, neither the
Exchange Offer Registration Statement nor the Shelf Registration Statement has
been filed with the Commission; (ii) within 150 days after the Issue Date, the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
applicable, has not been declared effective; (iii) within 180 days after the
Issue Date, the Exchange Offer has not been consummated; or (iv) after either
the Exchange Offer Registration Statement or the Shelf Registration Statement
has been declared effective, such Registration Statement thereafter ceases to be
effective or usable (subject, in the case of the Shelf Registration Statement,
to the exceptions set forth in the Registration Rights Agreement) in connection
with resales of Initial Notes or Exchange Notes in accordance with and during
the periods specified in Sections 2 and 3 of the Registration Rights Agreement
(each such event referred to in clauses (i) through (iv), a "Registration
Default"), liquidated damages ("Liquidated Damages") will accrue on the Initial
Notes and the Exchange Notes from and including the date on which any such
Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured. Liquidated Damages will accrue at a rate
equal to 0.25% per annum of the aggregate principal amount of the Notes during
the 90-day period immediately following the occurrence of any Registration
Default and shall increase by 0.25% per annum for each subsequent 90-day period
during which such Registration Default continues, but in no event shall such
Liquidated Damages exceed 1.00% per annum.
7. Denominations, Transfer, Exchange.
The Notes are in registered form only without coupons in
denominations of $1,000 and integral multiples of $1,000. A Holder may transfer
or exchange Notes by presentation of such Notes to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
equal principal amount of Notes of other denominations. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Note selected for
redemption, except the unredeemed part thereof if the Note is redeemed in part,
or transfer or exchange any Notes for a period of 15 days before a selection of
Notes to be redeemed.
8. Persons Deemed Owners.
The registered Holder of this Note shall be treated as the
owner of it for all purposes.
A-4
9. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, Holders entitled to the money must look
to the Company for payment unless an abandoned property law designates another
person.
10. Amendment, Supplement, Waiver.
Subject to certain exceptions, the Indenture or the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the outstanding Notes and any past default or
compliance with any provision relating to the Notes may be waived in a
particular instance with the consent of the Holders of a majority in principal
amount of the outstanding Notes. Without the consent of any Holder, the Company
and the Trustee may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to create a Series and establish
its terms, to remove a Guarantor which, in accordance with the terms of the
Indenture, ceases to be liable in respect of its Guarantee, or to make any other
change, provided such action does not adversely affect the rights of any Holder.
11. Successor Corporation.
When a successor corporation assumes all the obligations of
its predecessor under the Notes and the Indenture, the predecessor corporation
will be released from those obligations.
12. Trustee Dealings With Company.
American Stock Transfer & Trust Company, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its affiliates, and may
otherwise deal with the Company or its affiliates, as if it were not Trustee.
13. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Notes or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
14. Discharge of Indenture.
The Indenture contains certain provisions pertaining to
defeasance, which provisions shall for all purposes have the same effect as if
set forth herein.
A-5
15. Authentication.
This Note shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Note.
16. Abbreviations.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
A-6
ASSIGNMENT FORM
If you the Holder want 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 ID number)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address, and zip code)
and irrevocably appoint
--------------------------------------------------------------------------------
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
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.
In connection with any transfer of this Note occurring prior
to the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act") covering resales of this Note
(which effectiveness shall not have been suspended or terminated at the
A-7
date of the transfer) and (ii) two years from the Issue Date, the undersigned
confirms that it has not utilized any general solicitation or general
advertising in connection with the transfer:
[Check One]
(1) __ to the Company or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
(3) __ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933,
as amended) that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of
which letter can be obtained from the Trustee); or
(4) __ outside the United States to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act of
1933, as amended; or
(5) __ pursuant to the exemption from registration provided by Rule
144 under the Securities Act of 1933, as amended; or
(6) __ pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(7) __ pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
A-8
[ ] The transferee is an Affiliate of the Company.
Unless one of the items is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if item
(3), (4), (5) or (7) is checked, the Company or the Trustee may require, prior
to registering any such transfer of the Notes, in their sole discretion, such
written legal opinions, certifications (including an investment letter in the
case of box (3) or (7)) and other information as the Trustee or the Company has
reasonably requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
If none of the foregoing items are checked, the Trustee or
Registrar shall not be obligated to register this Note in the name of any person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 2.14 of the Indenture
shall have been satisfied.
Dated: Signed:
-------------------- ----------------------------------
(Sign exactly as name appears on
the other side of this Note)
Signature Guarantee:
-----------------------------------
(Signature must be guaranteed)
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.
A-9
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
-------------- ------------------------------------------------
NOTICE: To be executed by an executive officer
A-10
[FORM OF NOTATION ON SECURITY RELATING TO GUARANTEE]
GUARANTEE
[List of Guarantors] (the "Guarantors") have unconditionally
guaranteed, jointly and severally (such guarantee by each Guarantor being
referred to herein as the "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Notes, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal and
interest, if any, on the Notes, to the extent lawful, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms set forth in Article Nine of the
Indenture and (ii) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.
No past, present or future stockholder, officer, director,
employee or incorporator, as such, of any of the Guarantors shall have any
liability under the Guarantee by reason of such person's status as stockholder,
officer, director, employee or incorporator. Each holder of a Note by accepting
a Note waives and releases all such liability. This waiver and release are part
of the consideration for the issuance of the Guarantees.
Each holder of a Note by accepting a Note agrees that any
Guarantor named below shall have no further liability with respect to its
Guarantee if such Guarantor otherwise ceases to be liable in respect of its
Guarantee in accordance with the terms of the Indenture.
A-11
The Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Notes upon which the Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
[List of Guarantors]
By:
------------------------------------
Title:
A-12
EXHIBIT B
NO. CUSIP NO.:
-------
8.5% SENIOR NOTES DUE 2012
X.X. XXXXXX, INC.
A DELAWARE CORPORATION
promises to pay to
or registered assigns
the principal sum of Dollars on April 15, 2012
8.5% Senior Notes Due 2012
Interest Payment Dates: April 15 and October 15, commencing October 15, 2002.
Record Dates: April 1 and October 1.
Authenticated: Dated:
X.X. XXXXXX, INC.
[Seal]
By
------------------------------
Title:
By
------------------------------
Title:
American Stock Transfer & Trust Company, as
Trustee, certifies that this is one of the Notes
referred to in the within mentioned Indenture.
By:
--------------------------------------
Authorized Signatory
B-1
X.X. XXXXXX, INC.
8.5% SENIOR NOTES DUE 2012
1. Interest.
X.X. XXXXXX, INC. (the "Company"), a Delaware corporation,
promises to pay interest on the principal amount of this Note at the rate per
annum shown above. The Company will pay interest semiannually on April 15 and
October 15 of each year, commencing October 15, 2002, until the principal is
paid or made available for payment. Interest on the Notes will accrue from the
most recent date to which interest has been paid or duly provided for or, if no
interest has been paid, from April 11, 2002, provided that, if there is no
existing default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
interest payment date, interest shall accrue from such interest payment date.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest, if any, which will be paid on such special payment date to
Holders of record on such special record date as may be fixed by the Company) to
the persons who are registered Holders of Notes at the close of business on the
April 1 and October 1 immediately preceding the interest payment date. Holders
must surrender Notes to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
3. Paying Agent and Registrar.
Initially, American Stock Transfer & Trust Company (the
"Trustee") will act as Paying Agent and Registrar. The Company may change or
appoint any Paying Agent, Registrar or co-Registrar without notice. The Company
or any of its Subsidiaries or any of their Affiliates may act as Paying Agent,
Registrar or co-Registrar.
4. Indenture.
The Company issued the Notes under an Indenture dated as of
April 11, 2002, as supplemented ("Indenture"), among the Company, the Guarantors
and the Trustee. This Note is one of the duly authorized Exchange Notes of the
Company designated as its 8.5% Senior Notes due 2012 (the "Exchange Notes"). The
terms of the Notes and the Guarantees include those stated in the Indenture
(including those terms set forth in the Authorizing Resolution or supplemental
indenture pertaining to the Securities of the Series of which this Note is a
part) and those made part of the Indenture by reference to the Trust Indenture
Act of 1939 ("TIA") as in effect on the date of the Indenture. The Notes and the
Guarantees are subject to all such terms, and Holders are referred to the
Indenture and the Act for a statement of them. Capitalized terms not defined
herein have the meanings given to those terms in the Indenture.
B-2
The Notes include the Initial Notes and the Exchange Notes issued in exchange
for the Initial Notes pursuant to the Registration Rights Agreement (as
hereinafter defined).
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and the applicable Authorizing
Resolution or supplemental indenture. Requests may be made to: X.X. Xxxxxx,
Inc., 0000 Xxxxxxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxx 00000, Attention: Chief
Financial Officer.
5. Optional Redemption.
Except as set forth below, the Notes are not redeemable prior
to April 15, 2007. Thereafter, the Notes will be redeemable in whole or in part,
from time to time at the option of the Company, at the following redemption
prices (expressed as percentages of principal amount) if redeemed during the
twelve month period beginning with April 15 of the year indicated below, in each
case together with accrued and unpaid interest (including any Liquidated
Damages), if any, thereon to the date of redemption:
Year Percentage
---- ----------
2007...................................... 104.250%
2008...................................... 102.833%
2009...................................... 101.417%
2010 and thereafter....................... 100.000%
In addition, the Company may redeem Notes, at any time and
from time to time, on or prior to April 15, 2005, with the net cash proceeds of
one or more Public Equity Offerings by the Company, at a redemption price equal
to 108.5% of the principal amount of such Notes, plus accrued and unpaid
interest (including any Liquidated Damages), if any, to the date of redemption;
provided, that at least 65% of the aggregate principal amount of Notes,
excluding any Notes held by the Company or any of its Affiliates, remains
outstanding immediately after the occurrence of such redemption. Notice of any
such redemption must be given within 60 days after the date of the closing of
the relevant Public Equity Offering.
Selection of the Notes or portions thereof for redemption
pursuant to the foregoing shall be made by the Trustee only on a pro rata basis
or on as nearly a pro rata basis as is practicable (subject to the procedures of
The Depository Trust Company), unless such method is otherwise prohibited.
Notice of redemption will be mailed at least 30 days but not more than 60 days
before the redemption date to each Holder whose Notes are to be redeemed at the
registered address of such Holder. Notes in denominations larger than $1,000 may
be redeemed in part. On and after the redemption date, interest ceases to accrue
on the Notes or portions thereof called for redemption, provided that if the
Company shall default in the payment of such Notes at the redemption price
together with accrued interest, interest shall continue to accrue at the rate
borne by the Notes.
B-3
6. Denominations, Transfer, Exchange.
The Notes are in registered form only without coupons in
denominations of $1,0001 and integral multiples of $1,000. A Holder may transfer
or exchange Notes by presentation of such Notes to the Registrar or a
co-Registrar with a request to register the transfer or to exchange them for an
equal principal amount of Notes of other denominations. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not transfer or exchange any Note selected for
redemption, except the unredeemed part thereof if the Note is redeemed in part,
or transfer or exchange any Notes for a period of 15 days before a selection of
Notes to be redeemed.
7. Persons Deemed Owners.
The registered Holder of this Note shall be treated as the
owner of it for all purposes.
8. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its request. After that, Holders entitled to the money must look
to the Company for payment unless an abandoned property law designates another
person.
9. Amendment, Supplement, Waiver.
Subject to certain exceptions, the Indenture or the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the outstanding Notes and any past default or
compliance with any provision relating to the Notes may be waived in a
particular instance with the consent of the Holders of a majority in principal
amount of the outstanding Notes. Without the consent of any Holder, the Company
and the Trustee may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to create a Series and establish
its terms, to remove a Guarantor which, in accordance with the terms of the
Indenture, ceases to be liable in respect of its Guarantee, or to make any other
change, provided such action does not adversely affect the rights of any Holder.
----------
a If applicable. Insert different or additional denominations and
multiples.
B-4
10. Successor Corporation.
When a successor corporation assumes all the obligations of
its predecessor under the Notes and the Indenture, the predecessor corporation
will be released from those obligations.
11. Trustee Dealings With Company.
American Stock Transfer & Trust Company, the Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its affiliates, and may
otherwise deal with the Company or its affiliates, as if it were not Trustee.
12. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Notes or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issue of the Notes.
13. Discharge of Indenture.
The Indenture contains certain provisions pertaining to
defeasance, which provisions shall for all purposes have the same effect as if
set forth herein.
14. Authentication.
This Note shall not be valid until the Trustee signs the
certificate of authentication on the other side of this Note.
15. Abbreviations.
Customary abbreviations may be used in the name of a Holder or
an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
B-5
ASSIGNMENT FORM
If you the Holder want 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 ID number)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address, and zip code)
and irrevocably appoint
--------------------------------------------------------------------------------
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
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which requirements
include membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.
B-6
[FORM OF NOTATION ON SECURITY RELATING TO GUARANTEE]
GUARANTEE
[List of Guarantors] (the "Guarantors") have unconditionally
guaranteed, jointly and severally (such guarantee by each Guarantor being
referred to herein as the "Guarantee") (i) the due and punctual payment of the
principal of and interest on the Notes, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal and
interest, if any, on the Notes, to the extent lawful, and the due and punctual
performance of all other obligations of the Company to the Holders or the
Trustee all in accordance with the terms set forth in Article Nine of the
Indenture and (ii) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.
No past, present or future stockholder, officer, director,
employee or incorporator, as such, of any of the Guarantors shall have any
liability under the Guarantee by reason of such person's status as stockholder,
officer, director, employee or incorporator. Each holder of a Note by accepting
a Note waives and releases all such liability. This waiver and release are part
of the consideration for the issuance of the Guarantees.
Each holder of a Note by accepting a Note agrees that any
Guarantor named below shall have no further liability with respect to its
Guarantee if such Guarantor otherwise ceases to be liable in respect of its
Guarantee in accordance with the terms of the Indenture.
B-7
The Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Notes upon which the Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
[List of Guarantors]
By:
----------------------------------
B-8
