AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 14, 1998
REGISTRATION NO. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
ENGLE HOMES, INC.
(Exact name of Registrant as Specified in its Charter)
---------------
<TABLE>
<S> <C> <C>
FLORIDA 1521 59-2214791
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
123 N.W. 13TH STREET
BOCA RATON, FLORIDA 33432
(561) 391-4012
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
---------------
<TABLE>
COPY TO:
<S> <C>
DAVID SHAPIRO KENNETH S. GERSH, ESQ.
ENGLE HOMES, INC. GREENBERG TRAURIG HOFFMAN LIPOFF
123 N.W. 13TH STREET ROSEN & QUENTEL, P.A.
BOCA RATON, FLORIDA 33432 1221 BRICKELL AVENUE
(561) 391-4012 MIAMI, FLORIDA 33131
(Name, address, including zip code, and telephone number, (305) 579-0500
including area code, of agent for service) TELECOPY (305) 579-0717
</TABLE>
SEE TABLE OF ADDITIONAL REGISTRANTS BELOW
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ______
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================================
PROPOSED MAXIMUM
AGGREGATE OFFERING
TITLE OF EACH CLASS PRICE(1) AMOUNT OF REGISTRATION
OF SECURITIES TO BE REGISTERED FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
9 1/4% Series C Senior Notes due 2008............................ $150,000,000 $44,250
Guarantees of 9 1/4% Series C Senior Notes due 2008.............. -- -- (2)
Total...................................................... $150,000,000 $44,250
=====================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457 solely for the purpose of calculating
the registration fee.
(2) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate
fee is payable for the Guarantees.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
ADDRESS, INCLUDING ZIP
CODE, AND TELEPHONE
STATE OR OTHER NUMBER, INCLUDING AREA
JURISDICTION OF I.R.S. EMPLOYER CODE OF REGISTRANT'S
NAME INCORPORATION IDENTIFICATION NO. PRINCIPAL EXECUTIVE OFFICE
---- ------------- ------------------ --------------------------
<S> <C> <C> <C>
Banyan Trails, Inc. Florida 65-0775403 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Biltmore South Corp. Florida 59-1954786 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Arizona, Inc. Florida 65-0482568 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Atlanta, Inc. Florida 65-0357420 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Broward, Inc. Florida 65-0389397 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Colorado, Inc. Florida 65-0496809 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Gulf Coast, Inc. Florida 65-0429651 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Jacksonville, Inc. Florida 65-0839876 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Lake Bernadette, Inc. Florida 59-3288055 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/North Carolina, Inc. Florida 65-0482564 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Orlando, Inc. Florida 65-0326491 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Palm Beach, Inc. Florida 65-0388379 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Pembroke, Inc. Florida 65-0470740 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Southwest Florida, Inc. Florida 65-0559002 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Texas, Inc. Florida 65-0424508 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Virginia, Inc. Florida 65-0482565 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Greenleaf Homes, Inc. Florida 65-0762713 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Pembroke Falls Realty, Inc. Florida 65-0698225 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Preferred Builders Realty, Inc. Florida 59-2552841 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Preferred Home Mortgage Company Florida 65-0325930 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
St. Tropez At Boca Golf, Inc. Florida 65-0304088 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Universal Land Title, Inc. Florida 59-2630287 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes Realty, Inc. Georgia 65-0816680 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Engle Homes/Arizona Construction, Inc. Arizona 86-0873699 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
Universal Land Title of Colorado, Inc. Colorado 84-1281298 123 N.W. 13th Street
Boca Raton, Florida 33432
(561) 391-4012
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 14, 1998
PROSPECTUS
[LOGO]
ENGLE HOMES, INC.
OFFER TO EXCHANGE
UP TO $150,000,000 OF ITS
9 1/4% SERIES C SENIOR NOTES DUE 2008 FOR ANY AND ALL OUTSTANDING
9 1/4% SENIOR NOTES DUE 2008
($100,000,000 PRINCIPAL AMOUNT OUTSTANDING)
AND 9 1/4% SERIES B SENIOR NOTES DUE 2008
($50,000,000 PRINCIPAL AMOUNT OUTSTANDING)
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1998, UNLESS EXTENDED.
Engle Homes, Inc., a Florida corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus (as the same may be amended or supplemented from time to time, the
"Prospectus") and the accompanying Letter of Transmittal (the "Letter of
Transmittal," and together with this Prospectus, the "Exchange Offer"), to
exchange $1,000 principal amount of its 9 1/4% Series C Senior Notes due 2008
(the "Exchange Notes"), which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to a Registration Statement
(as defined) of which this Prospectus forms a part, for each $1,000 principal
amount of its outstanding 9 1/4% Senior Notes due 2008 (the "Existing Notes"),
of which $100,000,000 principal amount is outstanding, and for each $1,000
principal amount of its outstanding 9 1/4% Series B Senior Notes due 2008 (the
"Private Notes"), of which $50,000,000 principal amount are outstanding (the
Existing Notes and the Private Notes being referred to collectively as the "Old
Notes"). The form and terms of the Exchange Notes are identical in all material
respects to the form and terms of the Existing Notes and the Private Notes,
except for the total outstanding principal amount thereof, and except for
certain transfer restrictions and registration rights relating to the Private
Notes. The Exchange Notes will evidence the same debt as the Old Notes and will
be issued under and be entitled to the benefits of the Indenture (as defined).
The Exchange Notes will be general unsecured obligations of the
Company, ranking senior in right of payment to all existing and future
subordinated indebtedness of the Company and PARI PASSU in right of payment with
all existing and future senior indebtedness of the Company, including the New
Credit Facility (as defined); however, the Exchange Notes will be effectively
subordinated to all secured indebtedness of the Company and the Guarantors to
the extent of the value of the assets securing such indebtedness. The Exchange
Notes will be fully and unconditionally guaranteed (the "Guarantees"), on a
joint and several basis, by all of the Restricted Subsidiaries (as defined) of
the Company (collectively, the "Guarantors"). The Guarantees will be general
unsecured obligations of the Guarantors, ranking senior in right of payment to
all existing and future subordinated indebtedness of the Guarantors and PARI
PASSU in right of payment with all existing and future senior indebtedness of
the Guarantors, including the New Credit Facility Guarantees (as defined);
however, the Guarantees will be effectively subordinated to all secured
indebtedness of the Guarantors to the extent of the value of the assets securing
such indebtedness. As of June 8, 1998, the Company and the Guarantors
collectively had no secured indebtedness outstanding other than the Warehouse
Lines of Credit (as defined). See "Summary--Recent Developments--New Credit
Facility" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources." The Indenture permits
the Company to incur additional indebtedness, including secured debt, subject to
certain limitations.
The Company will accept for exchange any and all Old Notes that are
validly tendered and not withdrawn on or prior to 5:00 P.M., New York City time,
on the date the Exchange Offer expires, which will be , 1998, unless the
Exchange Offer is extended. See "The Exchange Offer - Expiration Date;
Extensions; Amendment." Tenders of Old Notes may be withdrawn at any time prior
to 5:00 P.M., New York City time, on the business day prior to the Expiration
Date (as defined), unless previously accepted for exchange. The Exchange Offer
is not conditioned upon any minimum principal amount of the Old Notes being
tendered for exchange. However, the Exchange Offer is subject to certain
conditions which may be waived by the Company and to the terms and provisions of
the Registration Rights Agreement (as defined) related to the Private Notes. Old
Notes may be tendered only in denominations of $1,000 principal amount and
integral multiples thereof. Pursuant to the terms of the Registration Rights
Agreement, the Company has agreed to pay certain expenses of the Exchange Offer.
See "The Exchange Offer."
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH INVESTORS SHOULD CONSIDER IN CONNECTION WITH THIS EXCHANGE OFFER AND AN
INVESTMENT IN THE EXCHANGE NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1998
<PAGE>
(CONTINUED FROM COVER PAGE)
The Exchange Notes will bear interest at the same rate and on the same
terms as the Old Notes. Consequently, the Exchange Notes will bear interest at
the rate of 9.25% per annum and interest will be payable semi-annually on
February 1 and August 1 of each year, commencing February 1, 1999. The Exchange
Notes will bear interest from and including August 1, 1998, the date of the most
recent interest payment made on the Old Notes. Holders of Old Notes whose Old
Notes are accepted for exchange will be deemed to have waived the right to
receive any payment in respect of interest on such Old Notes accrued to, but not
including, the date of the issuance of the Exchange Notes. Such waiver will not
result in the loss of interest income to such holders, since the Exchange Notes
will bear interest from August 1, 1998.
The Private Notes in an aggregate principal amount of $50 million were
sold by the Company on June 12, 1998 to Jefferies & Company, Inc. (the "Initial
Purchaser") in a transaction not registered under the Securities Act in reliance
upon Section 4(2) of the Securities Act (the "Private Placement"). The Private
Notes were thereupon offered and sold by the Initial Purchaser only to
"qualified institutional buyers" (as defined in Rule 144A under the Securities
Act) and to a limited number of institutional "accredited investors" (as defined
in Rule 501(a)(1),(2),(3) or (7) under the Securities Act), each of whom agreed
to comply with certain transfer restrictions and other conditions. Accordingly,
the Private Notes may not be offered, resold or otherwise transferred unless
registered under the Securities Act or unless an applicable exemption from the
registration requirements of the Securities Act is available. The Exchange Notes
are being offered hereunder in order to satisfy the obligations of the Company
under the Registration Rights Agreement entered into with the Initial Purchaser
in connection with the offering of the Private Notes. See "The Exchange Offer."
On February 2, 1998, the Company consummated an underwritten public
offering of the Existing Notes registered under the Securities Act. As such, the
Existing Notes are freely tradeable. THE COMPANY HAS INCLUDED THE EXISTING NOTES
IN THE EXCHANGE OFFER IN ORDER TO ALLOW THE PRIVATE NOTES AND THE EXISTING NOTES
TO TRADE AS A SINGLE ISSUE, WHICH THE COMPANY BELIEVES WILL INCREASE THE
LIQUIDITY OF THE EXCHANGE NOTES. SEE "RISK FACTORS -- CONSEQUENCES OF FAILURE TO
EXCHANGE," "RISK FACTORS -- POTENTIAL DILUTION OF VOTING INTEREST" AND "RISK
FACTORS -- ABSENCE OF A PUBLIC MARKET FOR THE EXCHANGE NOTES."
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission" or "SEC") to third parties, including
Exxon Capital Holdings Corporation, SEC No-Action Letter (available April 13,
1989), Morgan Stanley & Co. Inc., SEC No-Action Letter (available June 5, 1991)
(the "Morgan Stanley Letter") and Mary Kay Cosmetics, Inc., SEC No-Action Letter
(available June 5, 1991), the Company believes that the Exchange Notes issued
pursuant to the Exchange Offer for Private Notes may be offered for resale,
resold and otherwise transferred by the respective holders thereof (other than a
"Restricted Holder," being (i) a broker-dealer who purchased Private Notes
exchanged for such Exchange Notes directly from the Company to resell pursuant
to Rule 144A or any other available exemption under the Securities Act or (ii) a
person that is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business and
such holder is not participating in, and has no arrangement with any person to
participate in, the distribution (within the meaning of the Securities Act) of
such Exchange Notes. Eligible holders wishing to accept the Exchange Offer must
represent to the Company that such conditions have been met. Holders who tender
Private Notes in the Exchange Offer with the intention to participate in a
distribution of the Exchange Notes may not rely upon the Morgan Stanley Letter
or similar no-action letters. See "The Exchange Offer -- Terms of the Exchange
Offer." Each broker-dealer that receives Exchange Notes for its own account in
exchange for Private Notes pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. A broker-dealer that delivers such a prospectus to purchasers in
connection with such resales will be subject to certain of the civil liability
provisions under the Securities Act and will be bound by the provisions of the
Registration Rights Agreement (including certain indemnification rights and
obligations). This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Notes received in exchange for Private Notes where such Private Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Company has agreed that it will make this Prospectus and
any amendment or supplement to
i
<PAGE>
this Prospectus available to any broker-dealer for use in connection with any
such resale for a period of up to 180 days after consummation of the Exchange
Offer. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer.
The Exchange Notes will constitute a new issue of securities with no
established trading market, and there can be no assurance as to the liquidity of
any markets that may develop for the Exchange Notes or as to the ability of or
price at which the holders of Exchange Notes would be able to sell their
Exchange Notes. Future trading prices of the Exchange Notes will depend on many
factors, including, among others, prevailing interest rates, the Company's
operating results and the market for similar securities. The Company does not
intend to apply for listing of the Exchange Notes on any securities exchange.
The Initial Purchaser has informed the Company that they currently intend to
make a market for the Exchange Notes. However, they are not so obligated, and
any such market making may be discontinued at any time without notice.
Accordingly, no assurance can be given that an active public or other market
will develop for the Exchange Notes or as to the liquidity of or the trading
market for the Exchange Notes.
ANY PRIVATE NOTES AND/OR EXISTING NOTES NOT TENDERED AND ACCEPTED IN
THE EXCHANGE OFFER WILL REMAIN OUTSTANDING. TO THE EXTENT THAT ANY PRIVATE NOTES
AND/OR EXISTING NOTES OF OTHER HOLDERS ARE TENDERED AND ACCEPTED IN THE EXCHANGE
OFFER, A HOLDER'S ABILITY TO SELL UNTENDERED PRIVATE NOTES AND/OR EXISTING NOTES
COULD BE ADVERSELY AFFECTED. FOLLOWING CONSUMMATION OF THE EXCHANGE OFFER, THE
HOLDERS OF UNTENDERED PRIVATE NOTES WILL CONTINUE TO BE SUBJECT TO THE EXISTING
RESTRICTIONS UPON TRANSFER THEREOF.
The Company expects that the Exchange Notes issued pursuant to this
Exchange Offer will be issued in the form of one or more Global Exchange Notes
(as defined), which will be deposited with, or on behalf of, The Depository
Trust Company ("DTC") and registered in its name or in the name of Cede & Co.,
its nominee. Beneficial interest in the Global Exchange Notes representing the
Exchange Notes will be shown on, and transfers thereof to qualified
institutional buyers will be effected through, records maintained by DTC and its
participants. After the initial issuance of the Global Exchange Note, Exchange
Notes in certificated form will be issued in exchange for the Global Exchange
Note on the terms set forth in the Indenture. See "Book-Entry; Delivery and
Form."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF EXISTING NOTES OR PRIVATE NOTES IN ANY
JURISDICTION IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE
IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE MADE PURSUANT HERETO SHALL
UNDER ANY CIRCUMSTANCES IMPLY THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY OR THAT THE INFORMATION SET FORTH HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains certain forward-looking statements regarding
the intent, belief and current expectations of the Company's management.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to be correct. Generally, these statements relate to
business plans or strategies, projected or anticipated benefits or other
consequences of such plans or strategies, or projections involving anticipated
revenues, expenses, earnings, levels of capital expenditures or other aspects of
operating results. The operations of the Company are subject to a number of
uncertainties, risks and other influences, many of which are outside the control
of the Company and any one of which, or a combination of which, could materially
affect the results of the Company's operations and whether the forward-looking
statements made by the Company ultimately prove to be accurate. Important
factors that could cause actual results to differ materially from the Company's
expectations are disclosed in "Risk Factors" and elsewhere in this Prospectus.
The Company assumes no obligation to update any forward-looking statements.
ii
<PAGE>
AVAILABLE INFORMATION
The Company has filed a registration statement on Form S-4 (together
with all amendments and exhibits thereto, the "Registration Statement") under
the Securities Act with respect to the Exchange Notes offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission, and the exhibits thereto. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to herein and filed as an exhibit to the Registration Statement are not
necessarily complete and in each instance, reference is made to the copy of each
contract or document filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference. For further
information with respect to the Company and the Exchange Notes, reference is
hereby made to the Registration Statement and the exhibits thereto which may be
obtained from the Commission in the manner set forth above.
The Company is subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). As long as the Company is subject to such periodic reporting and
informational requirements, it will furnish all reports and other information
required thereby to the Securities and Exchange Commission (the "Commission")
and pursuant to the Indenture will furnish copies of such reports and other
information to the Trustee. Such reports, proxy statements and other information
may be inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's regional offices located at Citicorp Center, 500 West
Madison, 14th Floor, Chicago, Illinois 60661-2511 and Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material can be obtained by
mail from the Public Reference Section of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
also maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports and other information regarding registrants that file
electronically with the Commission. The Company's Common Stock is listed on the
Nasdaq National Market, and such reports, proxy statements and other information
can also be inspected at the offices of The Nasdaq National Market, Reports
Section, 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K, as amended, for the fiscal
year ended October 31, 1997, and the Company's Quarterly Reports on Form 10-Q
for the periods ended January 31, 1998 and April 30, 1998, and filed with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
and made a part of this Prospectus.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the Exchange Offer shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in a document incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as modified or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
REQUEST FROM ENGLE HOMES, INC., 123 N.W. 13TH STREET, SUITE 300, BOCA RATON,
FLORIDA 33432, ATTENTION: DAVID SHAPIRO, VICE PRESIDENT--FINANCE, TELEPHONE
NUMBER (561) 391-4012. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY [ ], 1998.
iii
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS
OR INCORPORATED BY REFERENCE HEREIN. UNLESS THE CONTEXT INDICATES OTHERWISE, THE
TERMS "COMPANY" AND "ENGLE" AS USED IN THIS PROSPECTUS REFER TO ENGLE HOMES,
INC., ITS PREDECESSORS AND ITS SUBSIDIARIES. FISCAL YEAR REFERENCES ARE TO THE
RESPECTIVE FISCAL YEAR ENDED OCTOBER 31.
THE COMPANY
Engle Homes, Inc. designs, constructs, markets and sells detached
single-family residences, townhomes, patio homes and condominiums to entry level
and move-up buyers, retirees and second-home, seasonal buyers. Engle operates in
nine geographic markets: Broward County, Palm Beach County and Martin County in
South Florida; Orlando in Central Florida; Tampa, Sarasota, Naples and Fort
Myers on the west coast of Florida; Denver, Colorado; Dallas, Texas; Virginia
and Maryland; Raleigh, North Carolina; Phoenix, Arizona; and Atlanta, Georgia.
The Company offers a variety of home styles at prices ranging from approximately
$80,000 to over $400,000 with an average sales price in fiscal 1997 of
approximately $203,000. In addition, the Company operates a mortgage company
which provides mortgages primarily to its home buyers in all of its geographic
markets and a title company which provides services to its home buyers and third
parties in Florida and Denver, Colorado.
Engle is a leading Florida homebuilder. The Company believes that it is
the number two and number four builder of single-family homes in South Florida
and Central Florida, respectively, based on revenues from unit closings for the
twelve months ended June 30, 1997. Florida is the number one homebuilding state
in the United States in terms of total housing starts. In addition, Florida is
currently the fourth largest state based upon total population and has
consistently ranked among the top four states in population growth over the past
seven decades.
Since 1993, Engle has expanded into eight of the top 20 homebuilding
markets in the nation through both start-up operations and the acquisition of a
homebuilder in Denver, Colorado. In fiscal 1997, approximately 32% of the
Company's revenues from home sales were generated outside of the Florida markets
as compared to none in fiscal 1993. Most recently, in fiscal 1997 Engle entered
both the Phoenix, Arizona and Atlanta, Georgia markets through start-up
operations.
Over the past five years, the Company's total revenues have grown from
$137.4 million in fiscal 1993 to $425.3 million in fiscal 1997, with annual
EBITDA (as defined) growing from $15.9 million to $40.3 million over the same
period, representing compound annual growth rates of 33% and 26%, respectively.
The Company's fiscal 1997 total revenues of $425.3 million and EBITDA of $40.3
million were the highest in the Company's history. The number of homes delivered
increased from 797 in fiscal 1993 to 1,992 in fiscal 1997. At the end of fiscal
1997, Engle was marketing homes in 68 communities.
BUSINESS STRATEGY
Engle believes that its success has been due to its market-oriented
approach which it applies to each of the following: (i) identifying new markets;
(ii) acquiring land; and (iii) diversifying its product offerings and price
ranges to appeal to most segments of the home buying public. Engle believes that
this strategy enables it to respond more rapidly to changing market conditions.
EXPAND IN EXISTING AND NEW MARKETS. The Company has successfully
expanded its operations through both start-up operations in new and existing
markets and the acquisition of a homebuilder in Denver, Colorado. Within its
existing markets, the Company believes that it is able to gain greater market
share by increasing the number of residential projects, thereby leveraging its
existing management structure and enhancing profitability through economies of
scale. As part of its strategy to further diversify geographically, the Company
continually seeks and evaluates market expansion opportunities, including
potential acquisitions of homebuilding companies. The Company seeks to expand
into geographic markets with significant single-family home permit activity,
substantial
1
<PAGE>
job growth, a diversified economy and an availability of strong management with
local market expertise. Since its initial public offering in January 1992, the
Company has expanded into eight new geographic markets.
OFFER A BROAD SELECTION OF PRODUCTS. The Company designs its homes to
appeal to a wide variety of home buyers, including entry level and move-up
buyers, retirees and second-home, seasonal buyers. Accordingly, the Company
offers a number of home styles and price ranges at various locations in each
market, including golf and waterfront communities in certain markets. Engle's
product offerings include semi-custom estate homes, detached single-family
residences, townhomes, semi-detached patio-homes, duplexes and condominiums.
Management believes that the Company's long-standing policy of product
diversification enables it to respond more rapidly to changing market
conditions.
SELECTIVELY ACQUIRE LAND. The Company maintains a land acquisition
policy designed to enhance profitability and return on capital while minimizing
the risks associated with investments in land. Engle seeks to identify and
acquire superior locations in each market and offer a number of communities with
diverse products and sales prices. The Company prefers to acquire improved
residential lots ready for construction by entering into option contracts,
whenever possible, or through outright purchases. The Company also acquires
tracts of land that require site improvements prior to the start of home
construction. Occasionally, Engle purchases larger parcels of undeveloped land
suited for master-planned communities, primarily in South Florida. When
acquiring larger parcels, the Company typically contracts to sell portions of
improved or unimproved land to other builders as a source of additional revenue
thereby reducing the Company's investment. In addition, when economically
advantageous to the Company, Engle enters into partnership or joint venture
agreements with other major homebuilders to purchase and develop well located
parcels of land. The Company generally purchases land only after required zoning
entitlements have been obtained.
MAINTAIN STRINGENT COST CONTROLS. The Company believes that maintaining
stringent cost controls is a key factor in achieving profitability. The Company
seeks to reduce its costs and risks by (i) obtaining required zoning
entitlements prior to purchasing land, (ii) using subcontractors to perform home
construction and site improvement work on a fixed price basis, (iii) minimizing
inventory of unsold homes, (iv) improving construction cycle time for new homes,
(v) using its position as a leading homebuilder to obtain national volume
discounts on construction materials and favorable pricing from subcontractors
and (vi) maintaining a sophisticated management information system that allows
it to monitor homebuilding production, scheduling and budgeting on a daily
basis.
COMMITMENT TO CUSTOMER SATISFACTION. The Company is dedicated to
providing customer satisfaction through quality construction and customer
service. Divisional managers are responsible for the quality of construction and
the level of customer satisfaction in their respective divisions.
EXPERIENCED MANAGEMENT WITH DECENTRALIZED OPERATING STRUCTURE. To serve
the needs of each of its markets, the Company relies upon the expertise of its
division managers, each of whom has significant experience in the homebuilding
industry. In order to align corporate and divisional profit goals, division
managers receive bonuses based on the return on assets of their respective
divisions. The division managers benefit from Engle's corporate expertise in
sales and marketing, land acquisition, financial services and its centralized
accounting department. The Company believes that this interaction between the
divisional managers and corporate management provides enhanced operating
results.
RECENT DEVELOPMENTS
NEW CREDIT FACILITY. On May 28, 1998, the Company entered into a Credit
Agreement (the "New Credit Facility"), dated May 28, 1998, by and among the
Company, the banks named therein, SunTrust Bank, South Florida, National
Association ("SunTrust"), as Administrative Agent, and NationsBank, N.A., as
Documentation Agent. The New Credit Facility provides for up to $170 million of
unsecured borrowings. Borrowings under the New Credit Facility generally bear
interest at a fluctuating rate based upon the prime rate as announced by
SunTrust, the federal funds rate or LIBOR. All outstanding borrowings under the
New Credit Facility are due in May 2001. The New Credit Facility contains
various operating and financial covenants and all of the Company's subsidiaries
are guarantors of the Company's obligations under the New Credit Facility (such
guarantees referred to
2
<PAGE>
herein as the "New Credit Facility Guarantees"). Available borrowings under the
New Credit Facility are limited to certain percentages of finished lots,
construction costs, land and land under development.
The New Credit Facility replaces all of the Company's secured lines of
credit, other than the Warehouse Lines of Credit (as defined). All amounts
outstanding under the Company's secured lines of credit as of April 30, 1998,
have been repaid with the proceeds of borrowings under the New Credit Facility.
As of June 8, 1998, the Company had $40 million outstanding under the New Credit
Facility. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."
The principal executive offices of the Company are located at 123 N.W.
13th Street, Suite 300, Boca Raton, Florida 33432, and its telephone number is
(561) 391-4012.
3
<PAGE>
THE EXCHANGE OFFER
The Private Notes........................ The Private Notes were sold by the
Company on June 12, 1998 (the
"Private Notes Offering"), to the
Initial Purchaser pursuant to a
Purchase Agreement dated June 8,
1998 (the "Purchase Agreement").
The Initial Purchaser subsequently
resold the Private Notes to
qualified institutional buyers
pursuant to Rule 144A under the
Securities Act and to accredited
institutional investors.
The Existing Notes....................... On February 2, 1998, the Company
consummated an underwritten public
offering of the Existing Notes. The
Existing Notes were issued under an
indenture dated as of February 2,
1998, among the Company, the
guarantors named therein and
American Stock Transfer & Trust
Company, as Trustee (the "Existing
Notes Indenture").
Registration Requirements................ Pursuant to the Purchase Agreement,
the Company and the Initial
Purchaser entered into a
Registration Rights Agreement dated
June 12, 1998 (the "Registration
Rights Agreement"), which grants
the holders of the Private Notes
certain exchange and registration
rights. The Exchange Offer is
intended to satisfy such exchange
and registration rights, which
terminate upon the consummation of
the Exchange Offer. If applicable
law or applicable interpretations
of the staff of the Commission do
not permit the Company to effect
the Exchange Offer, the Company has
agreed to file a shelf registration
(the "Shelf Registration
Statement") covering resales of the
Private Notes. The Registration
Rights Agreement does not obligate
the Company to make the Exchange
Offer to the holders of the
Existing Notes. The Company is
including the Existing Notes in the
Exchange Offer with the objective
of creating a single series of debt
securities having a total
outstanding principal amount which
is larger than that of either the
Existing Notes or the Private Notes
as separate series, thus resulting
in greater liquidity. See "Risk
Factors -- Potential Dilution of
Voting Interest."
The Exchange Offer....................... The Company is offering to exchange
$1,000 principal amount of the
Exchange Notes for each $1,000
principal amount of (i) Existing
Notes and (ii) Private Notes. As of
the date hereof, $100,000,000
aggregate principal amount of the
Existing Notes and $50,000,000
aggregate principal amount of the
Private Notes are outstanding. The
Company will issue the Exchange
Notes to holders after the
Expiration Date but not later than
, 1998 (the "Exchange Date").
Based on an interpretation of the
staff of the Commission set forth
in no action letters issued to
third
4
<PAGE>
parties, the Company believes that
Exchange Notes issued pursuant to
the Exchange Offer in exchange for
Private Notes may be offered for
resale, resold and otherwise
transferred by any holder thereof
(other than any such holder which
is an "affiliate' of the Company
within the meaning of Rule 405
under the Securities Act) without
compliance with the registration
and prospectus delivery provisions
of the Securities Act, provided
that such Exchange Notes are
acquired in the ordinary course of
such holder's business and that
such holder does not intend to
participate and has no arrangement
or understanding with any person to
participate in the distribution of
such Exchange Notes.
Each broker-dealer must acknowledge
that it will deliver a prospectus
in connection with any resale of
Exchange Notes issued in exchange
for Private Notes. The Letter of
Transmittal for the Exchange Offer
states that by so acknowledging and
by delivering a prospectus, a
broker-dealer will not be deemed to
admit that it is an "underwriter"
within the meaning of the
Securities Act. This Prospectus, as
it may be amended or supplemented
from time to time, may be used by a
broker-dealer in connection with
resales of Exchange Notes received
in exchange for Private Notes where
such Private Notes were acquired by
such broker-dealer as a result of
market-making activities or other
trading activities. The Company has
agreed to make this Prospectus
available to any participating
broker-dealer for use in connection
with any such resale for a period
of up to 180 days from the
consummation of the Exchange Offer.
Any holder who tenders in the
Exchange Offer with the intention
to participate, or for the purpose
of participating, in a distribution
of the Exchange Notes could not
rely on the position of the staff
of the Commission enunciated in
Exxon Capital Holdings Corporation
(available April 13, 1989) or
similar no-action letters and, in
the absence of an exemption
therefrom, must comply with the
registration and prospectus
delivery requirements of the
Securities Act in connection with
the resale transaction. Failure to
comply with such requirements in
such instance may result in such
holder incurring liability under
the Securities Act for which the
holder is not indemnified by the
Company.
Expiration Date.......................... The Exchange Offer will expire at
5:00 p.m., New York City time, on ,
1998, unless the Exchange Offer is
extended by the Company in its sole
discretion, in which case the term
"Expiration Date" shall mean the
latest date and time to which the
Exchange Offer is extended. See
"The Exchange Offer -- Expiration
Date; Extensions."
5
<PAGE>
Withdrawal Rights........................ Tenders may be withdrawn at any
time prior to 5:00 P.M., New York
City time, on the Expiration Date
pursuant to the procedures
described under "The Exchange Offer
- Withdrawal of Tenders."
Procedures for Tendering Old Notes....... Brokers, dealers, commercial banks,
trust companies and other nominees
who hold Existing Notes and/or
Private Notes through DTC may
effect tenders by book-entry
transfer in accordance with DTC's
Automated Tender Offer Program
("ATOP"). Holders of such Existing
Notes and/or Private Notes
registered in the name of a broker,
dealer, commercial bank, trust
company or other nominee are urged
to contact such person promptly if
they wish to tender Existing Notes
and/or Private Notes. In order for
Existing Notes and/or Private Notes
to be tendered by a means other
than by book-entry transfer, a
Letter of Transmittal must be
completed and signed in accordance
with the instructions contained
herein. The Letter of Transmittal
and any other documents required by
the Letter of Transmittal must be
delivered to the Exchange Agent by
mail, facsimile, hand delivery or
overnight carrier and either such
Existing Notes and/or Private Notes
must be delivered to the Exchange
Agent or specified procedures for
guaranteed delivery must be
complied with. See "The Exchange
Offer--Procedures for Tendering."
Letters of Transmittal and
certificates representing Existing
Notes and/or Private Notes should
not be sent to the Company. Such
documents should only be sent to
the Exchange Agent. See "The
Exchange Offer--Exchange Agent."
Effect on Holders of Private Notes....... As a result of the making of this
Exchange Offer, the Company will
have fulfilled one of its
obligations under the Registration
Rights Agreement and, with certain
exceptions noted below, holders of
Private Notes who do not tender
their Private Notes will not have
any further registration rights
under the Registration Rights
Agreement or otherwise. Such
holders will continue to hold the
untendered Private Notes and will
be entitled to all the rights and
subject to all the limitations
applicable thereto under the
Indenture, except to the extent
such rights or limitations, by
their terms, terminate or cease to
have further effectiveness as a
result of the Exchange Offer. All
untendered Private Notes will
continue to be subject to certain
restrictions on transfer.
Accordingly, if any Private Notes
are tendered and accepted in the
Exchange Offer, the trading market
of the untendered Private Notes
could be adversely affected. See
"Risk Factors - Exchange Offer
Procedures" and "Risk Factors --
Absence of a Public Market for the
Exchange Notes."
Effect on Holders of Existing Notes...... Holders of Existing Notes who do
not tender their Existing Notes
will continue to hold untendered
Existing
6
<PAGE>
Notes and will be entitled to all the rights and subject to all the
limitations applicable thereto under the Existing Notes Indenture. If any
holders of the Existing Notes tender such notes, the trading market of
untendered Existing Notes could be adversely affected. See "Risk Factors --
Exchange Offer Procedures" and "Risk Factors -- Absence of a Public Market for
the Exchange Notes."
Exchange Agent........................... The exchange agent with respect to
the Exchange Offer is American
Stock Transfer & Trust Company (the
"Exchange Agent"). The addresses,
and telephone and facsimile
numbers, of the Exchange Agent are
set forth in "The Exchange Offer --
Exchange Agent" and in the Letter
of Transmittal.
Use of Proceeds.......................... The Company will not receive any
cash proceeds from the issuance of
the Exchange Notes offered hereby.
See "Use of Proceeds." For a
discussion of the use of the net
proceeds received by the Company
from the sale of the Private Notes,
see "Private Placement."
United States Federal Income Tax
Considerations......................... Holders of Existing Notes and
Private Notes should review the
information set forth under "United
States Federal Income Tax
Considerations" prior to tendering
Existing Notes and/or Private Notes
in the Exchange Offer.
7
<PAGE>
THE EXCHANGE NOTES
The Exchange Notes....................... Up to $150,000,000 aggregate
principal amount of 9 1/4% Series C
Senior Notes due 2008 of Engle
Homes, Inc.
Maturity Date............................ February 1, 2008.
Interest Rate and Payment Dates.......... The Exchange Notes will bear
interest at the rate of 9.25% per
annum. Interest will accrue from
the August 1, 1998, the date of the
most recent interest payment made
on the Old Notes, and will be
payable semi-annually on February 1
and August 1 of each year,
commencing February 1, 1999.
Optional Redemption...................... The Exchange Notes will be
redeemable at the option of the
Company, in whole or in part, at
any time on or after February 1,
2003 at the redemption prices set
forth herein, plus accrued and
unpaid interest, if any, to the
date of redemption. In addition, at
any time on or prior to February 1,
2001, the Company may redeem up to
33% of the aggregate principal
amount of the Exchange Notes with
the net proceeds of one or more
public offerings of its common
stock at a redemption price equal
to 109.250% of the aggregate
principal amount of each Exchange
Note so redeemed, plus accrued and
unpaid interest, if any, to the
date of redemption; PROVIDED,
HOWEVER, that immediately after
giving effect to any such
redemption, not less than 67% of
the original aggregate principal
amount of the Private Notes and
Exchange Notes then outstanding are
outstanding immediately following
any such redemption. See
"Description of the Exchange Notes
-- Optional Redemption."
Offers to Purchase....................... In the event of a Change of Control
(as defined), the Company is
required to offer to repurchase all
of the Exchange Notes at a price
equal to 101% of the aggregate
principal amount thereof, plus
accrued and unpaid interest, if
any, to the date of repurchase. See
"Description of the Exchange
Notes--Certain Covenants--Change of
Control." In addition, the Company
will be obligated to make an offer
to repurchase Exchange Notes for
cash at a price equal to 100% of
the principal amount thereof, plus
accrued and unpaid interest, if
any, to the date of repurchase with
the net cash proceeds of certain
asset sales and if the Company's
Net Worth (as defined) falls below
a specified level for two
consecutive fiscal quarters. See
"Description of the Exchange
Notes--Certain
Covenants--Maintenance of Net
Worth" and "--Limitation on Asset
Sales."
Ranking.................................. The Exchange Notes will be general
unsecured obligations of the
Company, ranking senior in right of
payment to all existing and future
subordinated indebtedness of the
Company and PARI PASSU in right of
payment with all existing and
future senior indebtedness of the
Company, including the New Credit
Facility;
8
<PAGE>
however, the Exchange Notes will be
effectively subordinated to all
secured indebtedness of the Company
to the extent of the value of the
assets securing such indebtedness.
Currently, the Company and the
Guarantors collectively have no
secured indebtedness outstanding
other than the Warehouse Lines of
Credit. See "--Recent
Developments--New Credit Facility"
and "Management's Discussion and
Analysis of Financial Condition and
Results of Operations--Liquidity
and Capital Resources."
Guarantees............................... The Exchange Notes will be fully
and unconditionally guaranteed (the
"Guarantees"), on a joint and
several basis, by all of the
Restricted Subsidiaries (as
defined) of the Company
(collectively, the "Guarantors").
The Guarantees will be general
unsecured obligations of the
Guarantors, ranking senior in right
of payment to all existing and
future subordinated indebtedness of
the Guarantors and PARI PASSU in
right of payment with all existing
and future senior indebtedness of
the Guarantors, including the New
Credit Facility Guarantees;
however, the Guarantees will be
effectively subordinated to all
secured indebtedness of the
Guarantors to the extent of the
value of the assets securing such
Indebtedness. See "Description of
the Exchange Notes--The
Guarantees." Certain
Covenants................................ The Indenture contains certain
covenants, including covenants that
impose certain limitations on the
ability of the Company and its
Restricted Subsidiaries to, among
other things, incur additional
indebtedness, pay dividends or make
certain other restricted payments
and investments, consummate certain
asset sales, enter into certain
transactions with affiliates,
redesignate an Unrestricted
Subsidiary (as defined) to be a
Restricted Subsidiary, designate a
Restricted Subsidiary as an
Unrestricted Subsidiary, incur
liens, merge or consolidate with
any other person or sell, assign,
transfer, lease, convey or
otherwise dispose of all or
substantially all of its assets.
The Indenture also imposes
limitations on the Company's
ability to restrict the ability of
its Restricted Subsidiaries to pay
dividends or make certain payments
to the Company or any of its
Restricted subsidiaries. See
"Description of the Exchange
Notes-- Certain Covenants."
RISK FACTORS
Prospective purchasers of the Exchange Notes should consider all of the
information contained in this Prospectus before making an investment in the
Exchange Notes. In particular, purchasers should consider the investment
considerations set forth under "Risk Factors" herein.
9
<PAGE>
SUMMARY HISTORICAL AND AS ADJUSTED FINANCIAL AND OPERATING DATA
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
APRIL 30,
-------------------------
SIX MONTHS ENDED AS
YEARS ENDED OCTOBER 31, APRIL 30, ACTUAL ADJUSTED(1)
---------------------------------- ------------------------ ---------- ---------------
1995 1996 1997 1997 1998 1998 1998
---------- ---------- ---------- ----------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Home sales.................... $216,059 $303,972 $404,407 $193,679 $195,352 $406,080 $406,080
Cost of home sales............ 184,888 260,651 345,295 165,537 165,029 344,787 344,540
-------- -------- -------- -------- -------- -------- --------
Homebuilding gross profit.. 31,171 43,321 59,112 28,142 30,323 61,293 61,540
-------- -------- -------- -------- -------- -------- --------
Land sales.................... 20,964 17,571 7,685 5,579 10,365 12,471 12,471
Cost of land sales............ 17,332 15,589 7,095 5,058 9,333 11,370 11,370
-------- -------- -------- -------- -------- -------- --------
Land gross profit.......... 3,632 1,982 590 521 1,032 1,101 1,101
Financial services income, 1,158 1,796 2,678 1,028 2,199 3,849 3,849
net........................
Other income, net............. 1,573 1,485 1,513 611 1,168 2,070 2,070
-------- -------- -------- -------- -------- -------- --------
Total gross profit......... 37,534 48,584 63,893 30,302 34,722 68,313 68,560
-------- -------- -------- -------- -------- -------- --------
Selling, marketing, general
and administrative
expenses................... 24,466 31,906 39,620 19,413 22,731 42,938 42,938
Depreciation and amortization. 3,532 2,977 2,374 1,272 1,235 2,337 2,218
-------- -------- -------- -------- -------- -------- --------
Income before income taxes 9,536 13,701 21,899 9,617 10,756 23,038 23,404
Provision for income taxes.... 3,624 5,206 8,431 3,703 4,141 8,869 9,011
-------- -------- -------- -------- -------- -------- --------
Income before extraordinary
charge (2)................. $ 5,912 $ 8,495 $ 13,468 $ 5,914 $ 6,615 $14,169 $14,393
======== ======== ========= ======== ======== ======= =======
Income per share before
extraordinary charge -
diluted.................... $0.74 $1.03 $1.58 $0.71 $0.74 $1.62 $1.64
Weighted average number
of shares oustanding -
diluted.................... 9,132 9,251 9,246 9,105 8,964 9,444 9,444
OTHER FINANCIAL DATA:
EBITDA(3)..................... $19,972 $28,221 $40,339 $18,725 $20,029 $41,643 $41,643
Interest incurred............. 13,750 15,272 15,623 7,815 8,277 16,085 15,558
Ratio of EBITDA to interest
incurred................... 1.45x 1.85x 2.58x 2.40x 2.42x 2.59x 2.68x
Ratio of homebuilding debt to
EBITDA..................... 7.38x 5.39x 3.77x N/A N/A 4.79x 4.89x
Ratio of earnings to fixed
charges (4)................ 1.18x 1.63x 2.40x 2.20x 2.24x 2.41x 2.51x
SUMMARY OPERATING DATA:
Units:
Deliveries................. 1,137 1,567 1,992 954 1,008 2,046 2,046
Backlog at end of period... 804 1,016 869 932 1,444 1,444 1,444
Aggregate sales value of
backlog.................... $161,900 $210,300 $173,989 $193,700 $278,100 $278,100 $278,100
Average sales price of homes
in backlog................. 201 207 200 208 193 193 193
</TABLE>
<TABLE>
<CAPTION>
AS OF APRIL 30, 1998
------------------------
AS
ACTUAL ADJUSTED(1)
---------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash................................................................................ $ 19,532 $ 19,532
Homebuilding inventories............................................................ 337,826 337,826
Total assets........................................................................ 405,749 406,570(5)
Homebuilding bank credit facilities (6)............................................. 59,298 53,598
9 1/4% Senior Notes due 2008 (excluding discount of $750)........................... 100,000 150,000
11 3/4% Senior Notes due 2000....................................................... 40,000 --
Total homebuilding debt.......................................................... 199,298 203,598
Total debt (7)................................................................... 218,874 223,174
Shareholders' equity................................................................ 153,292 151,468
</TABLE>
10
<PAGE>
- ---------------------
(1) As adjusted for the issuance and sale of the Private Notes in the
Private Placement and the application of the net proceeds therefrom as
described under "Private Placement."
(2) Income before the extraordinary charge for the six months and twelve
months ended April 30, 1998, excludes the extraordinary charge of
$810,000, net of income taxes, or $.09 per share, on a diluted basis,
resulting from the elimination of deferred loan costs and the premium
paid in connection with the redemption of $14,598,000 aggregate
principal amount of the Company's 7% Convertible Subordinated
Debentures due 2003.
(3) EBITDA is defined as income before income taxes, amortization of
capitalized interest expense included in the cost of goods sold,
depreciation, other amortization and extraordinary charge. EBITDA is a
widely accepted financial indicator of a company's ability to service
debt. However, EBITDA should not be construed as an alternative to
operating income or to cash flows from operating activities (as
determined in accordance with generally accepted accounting principles)
and should not be construed as an indication of the Company's operating
performance or as a measure of liquidity.
(4) Computed by dividing earnings by fixed charges. "Earnings" consist of
income from operations before income taxes, plus amortization of
previously capitalized interest included in costs of sales and fixed
charges, exclusive of capitalized interest. "Fixed charges" consist of
interest costs incurred, including capitalized interest costs plus
amortization of loan costs and that portion of operating lease rental
expense deemed to be representative of interest.
(5) Reflects the estimated professional fees and expenses associated with
the Offering and the write-off of the unamortized deferred financing
costs related to the 1994 Notes. A breakdown of the estimated costs and
write-off follows (in thousands):
<TABLE>
<S> <C>
Financing fees and debt issuance costs.................................................... $1,000
Legal and professional fees and other costs............................................... 200
Write-off of unamortized deferred financing costs (net of income taxes)................... (379)
--------
$ 821
</TABLE>
(6) On May 28, 1998, the Company entered into the New Credit Facility which
replaced the Company's homebuilding lines of credit which existed on
April 30, 1998. See "--Recent Developments--New Credit Facility" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."
(7) Total debt includes financial services debt.
11
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, HOLDERS OF EXISTING NOTES AND PRIVATE NOTES SHOULD
CAREFULLY CONSIDER THE FOLLOWING FACTORS BEFORE INVESTING IN THE EXCHANGE NOTES.
CONSEQUENCES OF A FAILURE TO EXCHANGE
Holders of Existing Notes and Private Notes who do not exchange their
Existing Notes and/or Private Notes for Exchange Notes in the Exchange Offer
will not be able to take advantage of the increased liquidity afforded by the
Exchange Notes which would have a total aggregate principal amount of
$150,000,000 as opposed to $100,000,000 for the Existing Notes and $50,000,000
for the Private Notes. To the extent that some of the Private Notes or Existing
Notes are tendered and accepted in the Exchange Offer, the trading market for
untendered and tendered but unaccepted Private Notes or Existing Notes, as the
case may be, could be adversely affected.
In addition, the Private Notes have not been registered under the
Securities Act or any state securities laws and therefore may not be offered,
sold or otherwise transferred except in compliance with the registration
requirements of the Securities Act and any other applicable securities laws, or
pursuant to an exemption therefrom or in a transaction not subject thereto, and
in each case in compliance with certain other conditions and restrictions.
Private Notes which remain outstanding after consummation of the Exchange Offer
will continue to bear a legend reflecting such restrictions on transfer. In
addition, upon consummation of the Exchange Offer, holders of Private Notes
which remain outstanding will not be entitled to any rights to have such Private
Notes registered under the Securities Act or to any similar rights under the
Registration Rights Agreement (subject to certain limited exceptions). The
Company does not intend to register under the Securities Act any Private Notes
which remain outstanding after consummation of the Exchange Offer (subject to
such limited exceptions, if applicable). To the extent that Private Notes are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Private Notes could be adversely affected.
FAILURE TO COMPLY WITH EXCHANGE OFFER PROCEDURES
Subject to the conditions set forth under "The Exchange
Offer--Conditions to the Exchange Offer," delivery of Exchange Notes in exchange
for Existing Notes and Private Notes tendered and accepted for exchange pursuant
to the Exchange Offer will be made only after timely receipt by the Exchange
Agent of (i) certificates for Existing Notes or Private Notes or a book-entry
confirmation of a book-entry transfer of Existing Notes or Private Notes into
the Exchange Agent's account at DTC, including an Agent's Message (as defined
under "The Exchange Offer--Acceptance for Exchange and Issuance of Existing
Notes and Private Notes") if the tendering holder does not deliver a Letter of
Transmittal, (ii) a completed and signed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees or, in the case of a book-entry
transfer, an Agent's Message in lieu of the Letter of Transmittal, and (iii) any
other documents required by the Letter of Transmittal. Therefore, holders of
Existing Notes and/or Private Notes desiring to tender such Existing Notes
and/or Private Notes in exchange for Exchange Notes should allow sufficient time
to ensure timely delivery. The Company is not under a duty to give notification
of defects or irregularities with respect to the tenders of Existing Notes
and/or Private Notes for exchange.
GENERAL REAL ESTATE, ECONOMIC, INTEREST RATES AND OTHER CONDITIONS
The homebuilding industry is cyclical and affected by changes in
general and local economic and other conditions including employment levels,
demographic considerations, availability of financing, interest rate levels,
consumer confidence and housing demand. In addition, homebuilders are subject to
various risks, many of them outside the control of the homebuilder including
competitive overbuilding, availability and cost of building lots, materials and
labor, adverse weather conditions which can cause delays in construction
schedules, cost overruns, changes in government regulations, and increases in
real estate taxes and other local government fees. The Company cannot predict
whether interest rates will be at levels attractive to prospective home buyers.
If interest rates increase, and in particular mortgage interest rates, the
Company's business could be adversely affected. See
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"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Competition and Market Factors."
LEVERAGE; POTENTIAL ADVERSE EFFECT OF INDEBTEDNESS ON FUTURE OPERATIONS
As of April 30, 1998, after giving effect to the issuance and sale of
the Private Notes in the Private Placement and the application of the net
proceeds therefrom as described under "Private Placement," the outstanding
indebtedness of the Company would have been approximately $223,174,000 and the
Company would have had stockholders' equity of approximately $151,468,000. In
addition, subject to restrictions in the Indenture and the New Credit Facility,
the Company may incur additional indebtedness in the future, some of which may
be secured. The Company's ability to make required debt service payments in the
future will be dependent on the Company's operating results, which are subject
to financial, economic and other factors affecting the Company that are beyond
its control. No assurance can be given that the Company will be able to make
required debt service payments. See "Capitalization."
The degree to which the Company is leveraged could have an adverse
impact on the Company, including (i) increased vulnerability to adverse general
economic and market conditions, (ii) impaired ability to expand and to respond
to increased competition, (iii) impaired ability to obtain additional financing
for future working capital, capital expenditures, general corporate or other
purposes and (iv) requiring that a significant portion of cash provided by
operating activities be used for the payment of debt obligations, thereby
reducing funds available for operations and future business opportunities. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-- Liquidity and Capital Resources."
GEOGRAPHIC CONCENTRATION; RISKS OF EXPANSION
The Company's operations are situated in South Florida; Central
Florida; the west coast of Florida; Denver, Colorado; Dallas, Texas; Virginia
and Maryland; Raleigh, North Carolina; Phoenix, Arizona; and Atlanta, Georgia.
Adverse general economic conditions in these markets could have a material
adverse impact on the operations of the Company. For fiscal 1997, approximately
68% of the Company's housing revenue and a significant portion of the Company's
operating income were derived from operations in its Florida markets. The
Company's performance could be significantly affected by changes in these
markets. The Company expanded into two new geographic markets, Phoenix, Arizona,
and Atlanta, Georgia, in fiscal 1997. New markets may prove to be less stable
and may involve delays, problems and expenses not typically found by the Company
in the existing markets with which it is familiar. See "Business."
LAND DEVELOPMENT ACTIVITIES
The Company develops land for some of its subdivisions, which
occasionally may consist of large tracts of land suited for master-planned
communities. Acquiring land and committing the financial and managerial
resources to develop such land involve significant risks. Before a subdivision
generates any revenue, material expenditures are required for items such as
acquiring land and constructing subdivision infrastructure (such as roads and
utilities).
SIGNIFICANT VOTING CONTROL BY PRINCIPAL SHAREHOLDERS
Alec Engelstein, the Company's Chairman, President and Chief Executive
Officer, and Harry Engelstein, the Company's Executive Vice President and Chief
Construction Officer, together beneficially own a total of approximately 32.0%
of the Company's outstanding Common Stock and together have significant voting
power with respect to the election of the Board of Directors of the Company, and
in general, the determination of the outcome of various matters submitted to the
shareholders of the Company for approval.
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DEPENDENCE ON KEY EXECUTIVES
The Company is managed by a relatively small number of executive
officers. The loss of the services of one or more of these executive officers,
particularly Alec Engelstein, the Company's Chairman, President and Chief
Executive Officer, could have an adverse effect on the Company's business and
operations. See "Management."
HOLDING COMPANY STRUCTURE; FRAUDULENT CONVEYANCE CONCERNS
The Company is a holding company which derives substantially all of its
operating income from its subsidiaries. The Company must rely on dividends and
other distributions from its subsidiaries to generate the funds necessary to
meet its obligations, including the payment of principal and interest on the
Notes. The ability of the Company's subsidiaries to pay such dividends or make
such distributions will be subject to, among other things, applicable state laws
and, under certain circumstances, restrictions contained in agreements or debt
instruments that the Company or its subsidiaries may enter into after the date
of the Indenture. All of the subsidiaries of the Company have jointly and
severally guaranteed the Notes. In addition, the Notes and the Guarantees will
be effectively subordinated to all secured indebtedness of the Company and the
Guarantors, respectively, to the extent of the assets securing such
indebtedness. Currently, the Company and the Guarantors collectively have no
secured indebtedness outstanding other than the Warehouse Lines of Credit. See
"Summary--Recent Developments--New Credit Facility" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
The Guarantees may be subject to review under federal or state
fraudulent conveyance law. To the extent that a court were to find that (x) a
Guarantee was incurred by a Guarantor with intent to hinder, delay, or defraud
any present or future creditor, or the Guarantor contemplated insolvency with a
design to prefer one or more creditors to the exclusion in whole or in part of
others, or (y) such Guarantor did not receive fair consideration or reasonable
equivalent value for issuing its Guarantee and such Guarantor (i) was insolvent,
(ii) was rendered insolvent by reason of the issuance of such Guarantee, (iii)
was engaged or about to engage in a business or transaction for which the
remaining assets of such Guarantor constituted unreasonably small capital to
carry on its business, or (iv) intended to incur, or believed that it would
incur, debts beyond its ability to pay such debts as they matured, a court could
avoid or subordinate such Guarantee in favor of the Guarantor's creditors. Among
other things, a legal challenge of a Guarantee on fraudulent conveyance grounds
may focus on the benefits, if any, realized by each Guarantor as a result of the
issuance by the Company of the Notes. The measure of insolvency for purposes of
the foregoing will vary depending on the law of the jurisdiction being applied.
Generally, however, an entity would be considered insolvent if the sum of its
debts (including contingent or unliquidated debts) is greater than all its
property at a fair valuation or if the present fair saleable value of its assets
is less than the amount that will be required to pay its probable liability on
its existing debts as they become absolute and matured. Pursuant to the terms of
the Guarantees, the liability of each Guarantor is limited to the maximum amount
of indebtedness permitted, at the time of the grant of such Guarantee, to be
incurred in compliance with fraudulent conveyance or similar laws.
To the extent any Guarantee was avoided or subordinated as a fraudulent
conveyance, limited as described above, or held unenforceable for any other
reason, holders of the Notes would, to such extent, cease to have a claim in
respect of such Guarantee and, to such extent, would be creditors solely of the
Company and any Guarantor whose Guarantee was not avoided, subordinated,
limited, or held unenforceable. In such event, the claims of the holders of the
Notes against the issuer of an avoided, subordinated, limited or unenforceable
Guarantee would be subject to the prior payment of all liabilities of such
Guarantor. There can be no assurance that, after providing for all prior claims,
there would be sufficient assets to satisfy the claims of the holders of the
Notes.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
In the event of a Change of Control, the Company will be required to
offer to repurchase all of the outstanding Exchange Notes and any outstanding
Existing Notes and Private Notes which are not exchanged for Exchange Notes at a
purchase price equal to 101% of the aggregate principal amount thereof, plus
accrued and unpaid interest, if any, to the repurchase date. There can be no
assurance that the Company will have sufficient funds available or will be
permitted by its other indebtedness agreements to repurchase the Exchange Notes
and any
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outstanding Existing Notes and Private Notes upon the occurrence of a Change of
Control. The Change of Control purchase feature of the Exchange Notes, the
Existing Notes and the Private Notes may in certain circumstances make more
difficult or discourage a takeover of the Company and, thus, the removal of
incumbent management. The Change of Control purchase feature, however, is not
the result of management's knowledge of any specific effort to obtain control of
the Company by means of a merger, tender offer, solicitation or otherwise, or
part of a plan by management to adopt a series of anti-takeover provisions. See
"Description of the Exchange Notes--Certain Covenants--Change of Control."
COMPETITION
The homebuilding industry is highly competitive and fragmented. The
Company competes in each of its markets with numerous national, regional and
local builders, including some builders with greater financial resources.
Builders of new homes compete not only for home buyers, but also for desirable
properties, raw materials and skilled subcontractors. The Company also competes
for residential sales with individual sales of existing homes and available
rental housing. See "Business--Competition and Market Factors."
GOVERNMENTAL REGULATION
In developing housing communities, the Company must obtain the approval
of numerous government authorities regulating such matters as permitted land
uses and levels of density, the installation of utility services such as water
and waste disposal and the dedication of acreage for open space, parks, schools
and other community purposes. Several authorities in Florida and other states
have imposed impact fees as a means of defraying the cost of providing certain
governmental services to developing areas and the amount of these fees has
increased significantly during recent years. Many state laws require the use of
specific construction materials which reduce the need for energy-consuming
heating and cooling systems. Local governments also, at times, declare
moratoriums on the issuance of building permits and impose other restrictions in
areas where sewage treatment facilities and other public facilities do not reach
minimum standards. The Company is also subject to a variety of Federal, state
and local statutes, ordinances, rules and regulations concerning protection of
health and the environment. The particular environmental laws which apply to any
given community vary greatly according to the community site, the site's
environmental conditions and the present and former uses of the site. Prior to
consummating the purchase of land, the Company engages independent environmental
engineers to evaluate such land for the presence of hazardous or toxic
materials, wastes or substances. Such governmental regulation may result in
delays, cause the Company to incur substantial compliance and other costs and
prohibit or severely restrict development in certain regions or areas, which
could have an adverse effect on the Company's business and results of
operations. See "Business-- Government Regulation and Environmental Matters."
To varying degrees, certain permits and approvals will be required to
complete the residential developments currently being planned by the Company.
The ability of the Company to obtain necessary approvals and permits for these
projects is often beyond the Company's control, and could restrict or prevent
the development of otherwise desirable property. The length of time necessary to
obtain permits and approvals increases the carrying costs of unimproved property
acquired for the purpose of development and construction. In addition, the
continued effectiveness of permits already granted is subject to factors such as
changes in policies, rules and regulations and their interpretation and
application.
POTENTIAL DILUTION OF VOTING INTEREST
To the extent all of the Existing Notes and Private Notes are exchanged
for Exchange Notes, $150 million aggregate principal amount of Exchange Notes
will be outstanding following consummation of the Exchange Offer, and the
Exchange Notes will be deemed to be a single series of debt securities
outstanding under the Indenture. Accordingly, the individual voting interest of
each holder of Existing Notes or Private Notes will be diluted. In addition,
issuances of additional Notes under the Indenture, to the extent permitted by
the debt incurrence limitations of the Indenture, may result in further dilution
of the individual voting interest of the holders of Exchange Notes. See
"Description of the Exchange Notes."
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ABSENCE OF PUBLIC MARKET
The Exchange Notes will be new securities for which there currently is
no market. There can be no assurance as to the liquidity of any markets that may
develop for the Exchange Notes, the ability of holders of the Exchange Notes to
sell their Exchange Notes, or the price at which holders would be able to sell
their Exchange Notes. Future trading prices of the Exchange Notes will depend on
many factors, including, among other things, prevailing interest rates, the
Company's operating results and the market for similar securities. The Initial
Purchaser has informed the Company that, following completion of the Exchange
Offer, it intends to make a market in the Exchange Notes. However, the Initial
Purchaser is not obligated to do so and any market making may be discontinued at
any time without notice. Therefore, there can be no assurance that any active
market for the Exchange Notes will develop. The Company does not intend to apply
for listing of the Exchange Notes on any securities exchange or for quotation
through the National Association of Securities Dealers Automated Quotation
System.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Private Notes were sold by the Company on June 12, 1998 to the
Initial Purchaser pursuant to the Purchase Agreement. The Initial Purchaser
subsequently resold the Private Notes to qualified institutional buyers pursuant
to Rule 144A under the Securities Act and to accredited institutional investors.
As a condition of the purchase of the Private Notes by the Initial Purchaser,
the Company entered into the Registration Rights Agreement with the Initial
Purchaser which requires, among other things, that the Company file with the
Commission a registration statement under the Securities Act with respect to an
offer by the Company to the holders of the Private Notes to issue and deliver to
such holders, in exchange for such Private Notes, a like principal amount of
Exchange Notes. The Company is required to use its best efforts to cause the
Registration Statement to be declared effective by the Commission under the
Securities Act and commence the Exchange Offer. The Exchange Notes are to be
issued without a restrictive legend and may be reoffered and resold by the
holder without restrictions or limitations under the Securities Act (other than
any such holder that is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act). A copy of the Registration Rights Agreement has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part.
On February 2, 1998, the Company consummated an underwritten public
offering of the Existing Notes. The Existing Notes were issued under the
Existing Notes Indenture. The form and terms of the Existing Notes are identical
in all material respects to the form and terms of the Exchange Notes, except for
the total outstanding principal amount thereof. The Registration Rights
Agreement does not obligate the Company to make the Exchange Offer to the
holders of the Existing Notes. The Company is including the Existing Notes in
the Exchange Offer with the objective of creating a single series of debt
securities having a total outstanding principal amount which is larger than that
of either the Existing Notes or the Private Notes as separate series, thus
resulting in greater liquidity. See "Risk Factors -- Potential Dilution of
Voting Interest."
The Exchange Offer is not being made to, nor will the Company accept
tenders for exchange from, holders of Old Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect
to the Exchange Offer means any person in whose name the Existing Notes or the
Private Notes are registered on the books of the Company or any other person who
has obtained a properly completed bond power from the registered holder, or any
person whose Existing Notes or Private Notes are held of record by DTC who
desires to deliver such Existing Notes or Private Notes by book-entry transfer
at DTC.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal, the Company will
accept all Existing Notes and Private Notes properly tendered and not withdrawn
prior to 5:00 P.M., New York City time, on the Expiration Date. Holders may
tender their Old Notes in whole or in part in denominations of $1,000 or any
integral multiple thereof. On the Exchange Date, the Company will issue for each
$1,000 principal amount of Old Notes surrendered to the Company pursuant to the
Exchange Offer a like aggregate principal amount of Exchange Notes.
Each holder of Private Notes who wishes to exchange Private Notes for
Exchange Notes in the Exchange Offer is required to make certain
representations, including that (i) it is neither an "affiliate" of the Company
nor a broker-dealer tendering Old Notes acquired directly from the Company for
its own account, (ii) any Exchange Notes to be received by it are being acquired
in the ordinary course of its business and (iii) it is not participating in, and
it has no arrangement with any person to participate in, the distribution
(within the meaning of the Securities Act) of the Exchange Notes. In addition,
in connection with any resales of Exchange Notes received in exchange for
Private Notes pursuant to the Exchange Offer, any broker-dealer who acquired
such Exchange Notes for its own account as a result of market-making activities
or other trading activities must acknowledge that it will deliver a
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prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes. The staff of the SEC has taken the position in
no-action letters issued to third parties including Shearman & Sterling, SEC
No-Action Letter (available July 2, 1993), that participating broker-dealers may
fulfill their prospectus delivery requirements with respect to the Exchange
Notes (other than a resale of an unsold allotment from the original sale of
Private Notes) with this Prospectus, as it may be amended or supplemented from
time to time. Under the Registration Rights Agreement, the Company is required
to allow participating broker-dealers to use this Prospectus, as it may be
amended or supplemented from time to time, in connection with the resale of such
Exchange Notes. See "Plan of Distribution."
The Exchange Offer shall be deemed to have been consummated upon the
earlier to occur of (i) the Company having exchanged Exchange Notes for all
outstanding Old Notes (other than Private Notes held by a Restricted Holder)
pursuant to the Exchange Offer and (ii) the Company having exchanged, pursuant
to the Exchange Offer, Exchange Notes for all Old Notes that have been tendered
and not withdrawn on the date that is 30 days following the commencement of the
Exchange Offer. After such event, holders of Private Notes seeking liquidity in
their investment would have to rely on exemptions to registration requirements
under the securities laws, including the Securities Act.
As of the date of this Prospectus, $150,000,000 principal amount of Old
Notes are issued and outstanding ($100,000,000 of Existing Notes and $50,000,000
of Private Notes). In connection with the issuance of the Private Notes, the
Company arranged for the Private Notes to be eligible for trading in the Private
Offering, Resale and Trading through Automated Linkages (PORTAL) Market, the
National Association of Securities Dealers' screen based, automated market
trading of securities eligible for resale under Rule 144A.
The Company shall be deemed to have accepted for exchange validly
tendered Old Notes when, as and if the Company has given oral or written notice
thereof to the Exchange Agent. See "--Exchange Agent." The Exchange Agent will
act as agent for the tendering holders of Old Notes for the purpose of receiving
Exchange Notes from the Company and delivering Exchange Notes to such holders.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted Old Notes will be returned, without
expense, to the tendering holder thereof as promptly as practicable after the
Expiration Date. Holders of Old Notes who tender in the Exchange Offer will not
be required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "-- Fees and Expenses."
This Prospectus, together with the accompanying Letter of Transmittal,
is being sent to all registered holders as of the date of this Prospectus.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean , 1998, unless the Company, in
its sole discretion, extends the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date to which the Exchange Offer is
extended. In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
record holders of Old Notes an announcement thereof, each prior to 9:00 A.M.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Such announcement may state that the Company is extending the
Exchange Offer for a specified period of time. The Company reserves the right
(i) to delay acceptance of any Old Notes, to extend the Exchange Offer or to
terminate the Exchange Offer and to refuse to accept Old Notes not previously
accepted, if any of the conditions set forth herein under "-- Termination" shall
have occurred and shall not have been waived by the Company (if permitted to be
waived by the Company), by giving oral or written notice of such delay,
extension or termination to the Exchange Agent, and (ii) to amend the terms of
the Exchange Offer in any manner deemed by it to be advantageous to the holders
of the Old Notes. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
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amendment in a manner reasonably calculated to inform the holders of the Old
Notes of such amendment. Without limiting the manner in which the Company may
choose to make public announcements of any delay in acceptance, extension,
termination or amendment of the Exchange Offer, the Company shall have no
obligation to publish, advertise, or otherwise communicate any such public
announcement, other than by making a timely release to the Dow Jones News
Service.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest at a rate equal to 9.25% per
annum. Interest on the Exchange Notes will be payable semi-annually on February
1 and August 1 of each year, commencing February 1, 1999. The Exchange Notes
will bear interest from and including August 1, 1998, the date of the most
recent interest payment made on the Old Notes. Holders of Old Notes whose Old
Notes are accepted for exchange will be deemed to have waived the right to
receive any payment in respect of interest on such Old Notes accrued to, but not
including, the date of the issuance of the Exchange Notes. Such waiver will not
result in the loss of interest income to such holders, since the Exchange Notes
will bear interest from August 1, 1998.
PROCEDURES FOR TENDERING OLD NOTES
VALID TENDER
Except as set forth below, in order for Old Notes to be validly
tendered by book-entry transfer, an Agent's Message or a completed and signed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and in either case any other documents required by the Letter of
Transmittal, must be delivered to the Exchange Agent by mail, facsimile, hand
delivery or overnight carrier at one of the Exchange Agent's addresses set forth
under "--Exchange Agent" on or prior to the Expiration Date and either (i) such
Old Notes must be tendered pursuant to the procedures for book-entry transfer
set forth below or (ii) the guaranteed delivery procedures set forth below must
be complied with.
Except as set forth below, in order for Old Notes to be validly
tendered by a means other than by book-entry transfer, a completed and signed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees and any other documents required by the Letter of Transmittal, must
be delivered to the Exchange Agent by mail, facsimile, hand delivery or
overnight carrier at one of the Exchange Agent's addresses set forth under
"--Exchange Agent" on or prior to the Expiration Date and either (i) such Old
Notes must be delivered to the Exchange Agent on or prior to the Expiration Date
or (ii) guaranteed delivery procedures set forth below must be complied with.
If less than all of the Old Notes are tendered, a tendering holder
should fill in the amount of Old Notes being tendered in the appropriate box on
the Letter of Transmittal. The entire amount of Old Notes delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
BOOK-ENTRY TRANSFER
The Exchange Agent and DTC have confirmed that any Direct Participant
(as defined in "Book-Entry; Delivery and Form") in DTC's book-entry transfer
facility system may utilize DTC's ATOP procedures to tender Old Notes. The
Exchange Agent will establish an account with respect to the Old Notes at DTC
for purposes of the Exchange Offer within two business days after the date of
this Prospectus. Any Direct Participant may make a book-entry delivery of the
Old Notes by causing DTC to transfer such Old Notes into the Exchange Agent's
account at DTC in accordance with DTC's ATOP procedures for transfer. However,
although delivery of Old Notes may be
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effected through book-entry transfer into the Exchange Agent's account at DTC,
an Agent's Message or a completed and signed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal must in any case be delivered to and
received by the Exchange Agent at one of its addresses set forth under "--
Exchange Agent" on or prior to the Expiration Date, or the guaranteed delivery
procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
SIGNATURE GUARANTEES
Certificates for the Old Notes need not be endorsed and signature
guarantees on the Letter of Transmittal are unnecessary unless (a) a certificate
for the Old Notes is registered in a name other than that of the person
surrendering the certificate or (b) such holder completes the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" in the Letter
of Transmittal. In the case of (a) or (b) above, such certificates for Old Notes
must be duly endorsed or accompanied by a properly executed bond power, with the
endorsement or signature on the bond power and on the Letter of Transmittal
guaranteed by a firm or other entity identified in Rule 17Ad-15 under the
Exchange Act as an "eligible guarantor institution," including (as such terms
are defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker or dealer or government securities broker or dealer; (iii) a credit
union; (iv) a national securities exchange, registered securities association or
clearing agency; or (v) a savings association that is a participant in a
Securities Transfer Association (an "Eligible Institution"), unless surrendered
on behalf of such Eligible Institution. See Instruction 1 to the Letter of
Transmittal.
GUARANTEED DELIVERY
If a holder desires to tender Old Notes pursuant to the Exchange Offer
and the certificates for such Old Notes are not immediately available or time
will not permit all required documents to reach the Exchange Agent on or prior
to the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, such Old Notes may nevertheless be tendered,
provided that all of the following guaranteed delivery procedures are complied
with:
(a) such tenders are made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form accompanying the Letter of Transmittal, is
received by the Exchange Agent, as provided below, on or prior to the Expiration
Date; and
(c) the certificates (or a book-entry confirmation) representing all
tendered Old Notes, in proper form for transfer, together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees and any other documents required by the Letter
of Transmittal, are received by the Exchange Agent within three New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or
transmitted by facsimile or mail to the Exchange Agent and must include a
guarantee by an Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of Exchange
Notes in exchange for Old Notes tendered and accepted for exchange pursuant to
the Exchange Offer will in all cases be made only after timely receipt by the
Exchange Agent of Old Notes, or of a book-entry confirmation with respect to
such Old Notes, and a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees and any
other documents required by the Letter of Transmittal. Accordingly, the delivery
of Exchange Notes might not be made to all tendering holders at the same time,
and will depend upon when Old Notes, book-entry confirmations with respect to
Old Notes and other required documents are received by the Exchange Agent.
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The Company's acceptance for exchange of Old Notes tendered pursuant to
any of the procedures described above will constitute a binding agreement
between the tendering holder and the Company upon the terms and subject to the
conditions of the Exchange Offer.
DETERMINATION OF VALIDITY
All questions as to the form of documents, validity, eligibility
(including time of receipt) and acceptance for exchange of any tendered Old
Notes will be determined by the Company, in its sole discretion, whose
determination shall be final and binding on all parties. The Company reserves
the absolute right, in its sole and absolute discretion, to reject any and all
tenders determined by it not to be in proper form or the acceptance of which, or
exchange for, may, in the opinion of counsel to the Company, be unlawful. The
Company also reserves the absolute right, subject to applicable law, to waive
any of the conditions of the Exchange Offer as set forth under "--Conditions to
the Exchange Offer" or any condition or irregularity in any tender of Old Notes
of any particular holder whether or not similar conditions or irregularities are
waived in the case of other holders.
The interpretation by the Company of the terms and conditions of the
Exchange Offer (including the Letter of Transmittal and the instructions
thereto) will be final and binding. No tender of Old Notes will be deemed to
have been validly made until all irregularities with respect to such tender have
been cured or waived. Neither the Company, any affiliates or assigns of the
Company, the Exchange Agent nor any other person shall be under any duty to give
any notification of any irregularities in tenders or incur any liability for
failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of
attorney, or any other document required by the Letter of Transmittal is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by the Company,
proper evidence satisfactory to the Company, in its sole discretion, of such
person's authority to so act must be submitted.
A beneficial owner of Old Notes that are held by or registered in the
name of a broker, dealer, commercial bank, trust company or other nominee or
custodian is urged to contact such entity promptly if such beneficial holder
wishes to participate in the Exchange Offer.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be
withdrawn at any time on or prior to the Expiration Date.
In order for a withdrawal to be effective a written, telegraphic or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth under "-- Exchange Agent"
on or prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Notes to be withdrawn, the aggregate
principal amount of Old Notes to be withdrawn, and (if certificates for such Old
Notes have been tendered) the name of the registered holder of the Old Notes as
set forth on the Old Notes, if different from that of the person who tendered
such Old Notes. If Old Notes have been delivered or otherwise identified to the
Exchange Agent, then prior to the physical release of such Old Notes, the
tendering holder must submit the serial numbers shown on the particular Old
Notes to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old Notes tendered
for the account of an Eligible Institution. If Old Notes have been tendered
pursuant to the procedures for book-entry transfer set forth in "-- Procedures
for Tendering Old Notes," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Old Notes, in
which case a notice of withdrawal will be effective if delivered to the Exchange
Agent by written, telegraphic or facsimile transmission. Withdrawals of tenders
of Old Notes may not be rescinded. Old Notes properly withdrawn will not be
deemed validly tendered for purposes of the Exchange Offer, but may be
retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "--Procedures for
Tendering Old Notes."
21
<PAGE>
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
Neither the Company, any affiliate or assign of the Company, the Exchange Agent
nor any other person shall be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Old Notes which have been tendered but which are
withdrawn will be returned to the holder thereof promptly after withdrawal.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company will not be required to accept for
exchange, or to exchange, any Old Notes for any Exchange Notes, and, as
described below, may terminate the Exchange Offer (whether or not any Old Notes
have theretofore been accepted for exchange) or may waive any conditions to or
amend the Exchange Offer, if any of the following conditions have occurred or
exist or have not been satisfied:
(a) there shall occur a change in the current interpretation by the
staff of the Commission which permits the Exchange Notes issued pursuant to the
Exchange Offer in exchange for Old Notes to be offered for resale, resold and
otherwise transferred by holders thereof (other than broker-dealers and any such
holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such Exchange
Notes are acquired in the ordinary course of such holders' business and such
holders have no arrangement or understanding with any person to participate in
the distribution of such Exchange Notes; or
(b) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of the Company, would reasonably be expected to
impair its ability to proceed with the Exchange Offer; or
(c) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration Statement
or proceedings shall have been initiated or, to the knowledge of the Company,
threatened for that purpose or any governmental approval has not been obtained,
which approval the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole and absolute discretion that any
of the foregoing events or conditions has occurred or exists or has not been
satisfied, it may, subject to applicable law, terminate the Exchange Offer
(whether or not any Old Notes have theretofore been accepted for exchange) or
may waive any such condition or otherwise amend the terms of the Exchange Offer
in any respect. If such waiver or amendment constitutes a material change to the
Exchange Offer, the Company will promptly disclose such waiver or amendment by
means of a prospectus supplement that will be distributed to the registered
holders of the Old Notes and will extend the Exchange Offer to the extent
required by Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
American Stock Transfer & Trust Company has been appointed as Exchange
Agent for the Exchange Offer. Delivery of the Letters of Transmittal and any
other required documents, questions, requests for assistance, and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent as follows:
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL, BY FACSIMILE (ELIGIBLE INSTITUTIONS ONLY):
OVERNIGHT COURIER OR HAND DELIVERY:
(718) 234-5001
American Stock Transfer & Trust Company Attention: Exchange Department
40 Wall Street
New York, New York 10005 Confirmed by Telephone: (718) 921-8200
Attention: Exchange Department (Originals of all documents submitted by facsimile
should be sent promptly by hand, overnight courier or
registered or certified mail.)
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
</TABLE>
22
<PAGE>
FEES AND EXPENSES
The Company has agreed to pay the Exchange Agent reasonable and
customary fees for its services and will reimburse it for its reasonable
out-of-pocket expenses in connection therewith. The Company will also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this Prospectus
and related documents to the beneficial owners of Old Notes, and in handling or
tendering for their customers.
Holders who tender their Old Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith. If, however, Exchange Notes
are to be delivered to, or are to be issued in the name of, any person other
than the registered holder of the Old Notes tendered, or if a transfer tax is
imposed for any reason other than the exchange of Old Notes in connection with
the Exchange Offer, then the amount of any such transfer taxes (whether imposed
on the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder.
The Company will not make any payment to brokers, dealers or other
nominees soliciting acceptances of the Exchange Offer.
ACCOUNTING TREATMENT
No gain or loss for accounting purposes will be recognized by the
Company upon the consummation of the Exchange Offer. The expenses of the
Exchange Offer will be expensed by the Company under generally accepted
accounting principles.
PRIVATE PLACEMENT
The net proceeds to the Company from the Private Placement were
approximately $48.0 million. The Company used approximately $42,350,000 of the
net proceeds to redeem all of the $40 million aggregate principal amount of the
Company's 11 3/4% Senior Notes due 2000 outstanding at a price 105.875% of the
principal amount thereof and remainder to repay outstanding amounts under the
New Credit Facility.
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes in the Exchange Offer. In consideration for issuing the Exchange
Notes as contemplated in this Prospectus, the Company will receive in exchange a
like principal amount of Old Notes, the terms of which are identical in all
material respects to the Exchange Notes. The Old Notes surrendered in exchange
for the Exchange Notes will be retired and canceled and cannot be reissued.
Accordingly, issuance of the Exchange Notes will not result in any change in the
capitalization of the Company.
23
<PAGE>
CAPITALIZATION
The following table sets forth the actual capitalization of the Company
at April 30, 1998, and as adjusted to give effect to the issuance and sale of
the Private Notes in the Private Placement and the application of the net
proceeds therefrom as described under "Private Placement."
<TABLE>
<CAPTION>
AS OF APRIL 30, 1998
----------------------------------------
ACTUAL AS ADJUSTED
---------------- ---------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash................................................................ $ 19,532 $ 19,532
========== ==========
Debt:
Homebuilding debt
Bank credit facilities (1)...................................... 59,298 53,598
9 1/4% Senior Notes due 2008 (excluding discount of $750)....... 100,000 150,000
11 3/4% Senior Notes due 2000................................... 40,000 --
---------- ----------
Total homebuilding debt....................................... 199,298 203,598
---------- ----------
Financial services debt.......................................... 19,576 19,576
---------- ----------
Total debt................................................. 218,874 223,174
---------- ----------
Shareholders' equity:
Common Stock ($.01 par value, 25,000,000 shares authorized;
11,146,955 shares issued and outstanding) (2).................. 111 111
Additional paid-in capital....................................... 102,841 102,841
Retained earnings................................................ 50,340 48,516
---------- ----------
Total shareholders' equity................................. 153,292 151,468
---------- ----------
Total capitalization....................................... $ 372,166 $ 374,642
========== ==========
</TABLE>
- ---------------------
(1) On May 28, 1998, the Company entered into the New Credit Facility which
replaced the Company's secured lines of credit which existed on April 30,
1998, other than the Warehouse Lines of Credit. See "Summary--Recent
Developments--New Credit Facility" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
(2) Excludes 605,100 shares of Common Stock subject to outstanding options as
of April 30, 1998, of which options to purchase 539,100 shares were
exercisable on that date.
24
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table sets forth selected consolidated financial and
operating data of the Company. The selected consolidated financial and operating
data as of and for the years ended October 31, 1993 through 1997 were derived
from the Company's consolidated financial statements which have been audited by
BDO Seidman, LLP, independent certified public accountants. The selected
consolidated financial and operating data as of and for the six months ended
April 30, 1997 and 1998 were derived from the Company's unaudited financial
statements which, in the opinion of management, include all adjustments,
consisting of only normal recurring adjustments, necessary for a fair
presentation of such information for the unaudited interim periods. The
operating results for the six months ended April 30, 1998 are not necessarily
indicative of results for the full fiscal year. The information presented below
should be read in conjunction with the Company's Consolidated Financial
Statements and notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Prospectus or incorporated by reference herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED OCTOBER 31, APRIL 30,
------------------------------------------------------------ -------------------
1993 1994 1995 1996 1997 1997 1998
------------ ----------- ----------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................... $137,386 $224,459 $244,528 $332,088 $425,295 $205,228 $214,752
Costs and expenses:
Cost of sales - homes..... 112,352 183,752 184,888 260,651 345,295 165,537 165,029
Cost of sales - land...... 498 2,577 17,332 15,589 7,095 5,058 9,333
Selling, marketing,
general & administrative.. 12,741 19,993 24,466 31,906 39,620 19,413 22,731
Depreciation &
amortization.............. 1,677 2,402 3,532 2,977 2,374 1,272 1,235
Financial services........ 0 3,556 4,774 7,264 9,012 4,331 5,668
-------- -------- -------- -------- -------- -------- --------
Total costs and expenses.. 127,268 212,280 234,992 318,387 403,396 195,611 203,996
-------- -------- -------- -------- -------- -------- --------
Income before income taxes... 10,118 12,179 9,536 13,701 21,899 9,617 10,756
-------- -------- -------- -------- -------- -------- --------
Income before cumulative
effect of accounting
change and extraordinary
charge (1)................ $ 6,298 $ 7,575 $ 5,912 $ 8,495 $ 13,468 5,914 6,615
======== ========= ======== ======== ======== ======== ========
Income per share before
cumulative effect of
accounting change and
extraordinary charge
-- diluted............... $0.81 $0.96 $0.74 $1.03 $1.58 $0.71 $0.74
Weighted average number of
shares outstanding --
diluted................... 8,131 8,817 9,132 9,251 9,246 9,105 8,964
OTHER FINANCIAL DATA:
EBITDA(2)................. $15,924 $22,293 $19,972 $28,221 $40,339 $18,725 $20,029
Interest incurred......... 4,068 7,183 13,750 15,272 15,623 7,815 8,277
Ratio of EBITDA to
interest incurred...... 3.91x 3.10x 1.45x 1.85x 2.58x 2.40x 2.42x
Ratio of earnings to
fixed charges(3).......... 3.14x 2.56x 1.18x 1.63x 2.40x 2.20x 2.24x
SUMMARY OPERATING DATA:
Units:
Deliveries............. 797 1,225 1,137 1,567 1,992 954 1,008
Backlog at end of
period.............. 687 560 804 1,016 869 932 1,444
Aggregate sales value of
backlog................ $119,491 $108,200 $161,900 $210,300 $173,989 $193,700 $278,100
Average sales price of
homes in backlog.......... 174 193 201 207 200 208 193
</TABLE>
<TABLE>
<CAPTION>
AS OF OCTOBER 31,
----------------------------------------------------------- AS OF APRIL 30,
1993 1994 1995 1996 1997 1998
----------- ---------- ---------- ---------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash...................... $ 27,326 $ 13,121 $ 13,400 $ 21,700 $ 16,546 $ 19,532
Homebuilding inventories.. 88,902 138,428 198,664 220,564 230,108 337,826
Total assets.............. 143,991 188,913 251,918 284,789 288,412 405,749
Total homebuilding debt... 63,794 99,428 147,454 152,117 152,064 199,298
Total debt(4)............. 66,575 102,341 153,927 165,123 166,593 218,874
Shareholders' equity...... 58,102 66,303 74,106 81,492 93,180 153,292
</TABLE>
25
<PAGE>
- ------------------
(1) Effective November 1, 1993, the Company adopted statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes," which requires
an asset and liability method of accounting for income taxes. The Company
recorded a benefit of $1,332,000 in the first quarter of fiscal 1994 as a
cumulative effect on prior years of this accounting change which has been
excluded from the calculation of income before cumulative effect of
accounting change and extraordinary charge. Income before cumulative effect
of accounting change and extraordinary charge for the six months ended
April 30, 1998, excludes the extraordinary charge of $810,000, net of
income taxes, or $.09 per share, on a diluted basis, resulting from the
elimination of deferred loan costs and the premium paid in connection with
the redemption of $14,598,000 aggregate principal amount of the Company's
7% Convertible Subordinated Debentures due 2003.
(2) EBITDA is defined as income before income taxes, amortization of
capitalized interest expense included in the cost of goods sold,
depreciation, other amortization and cumulative effect of accounting change
and extraordinary charge. EBITDA is a widely accepted financial indicator
of a company's ability to service debt. However, EBITDA should not be
construed as an alternative to operating income or to cash flows from
operating activities (as determined in accordance with generally accepted
accounting principles) and should not be construed as an indication of the
Company's operating performance or as a measure of liquidity.
(3) Computed by dividing earnings by fixed charges. "Earnings" consist of
income from operations before income taxes, plus amortization of previously
capitalized interest included in costs of sales and fixed charges,
exclusive of capitalized interest costs. "Fixed Charges" consist of
interest costs incurred, including capitalized interest costs plus
amortization of loan costs and that portion of operating lease rental
expense deemed to be representative of interest.
(4) Total debt includes financial services debt.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS IS BASED UPON AND SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS AND THE RELATED NOTES THERETO INCORPORATED BY
REFERENCE IN THIS PROSPECTUS.
OVERVIEW
GENERAL. The following table sets forth for the periods indicated certain
items of the Company's financial statements expressed as a percentage of the
Company's total revenues:
<TABLE>
<CAPTION>
SIX MONTHS ENDED APRIL 30,
------------------------------------
1997 1998
--------------- --------------
<S> <C> <C>
Total revenues......................................................... 100.0% 100.0%
Costs of home construction and land sales.............................. 83.1 81.2
Selling, marketing, general and administrative expense................. 9.5 10.6
Income before income taxes............................................. 4.7 5.0
</TABLE>
BACKLOG. Sales of the Company's homes are generally made pursuant to a
standard contract which requires a down payment of up to 10% of the sales price.
The contract includes a financing contingency which permits the customer to
cancel in the event mortgage financing at prevailing interest rates (including
financing arranged by the Company) is unobtainable within a specified period,
typically four to six weeks. The Company includes an undelivered home sale in
its backlog upon execution of the sales contracts and receipt of the down
payment. Revenue is recognized only upon the closing and delivery of a home. The
Company estimates that the average period between the execution of a purchase
agreement for a home and delivery is approximately six months. The following
table sets forth the Company's backlog for the periods indicated:
<TABLE>
<CAPTION>
APRIL 30,
-------------------------------------------------------------------------------
1997 1998
------------------------------------- -------------------------------------
UNITS DOLLARS UNITS DOLLARS
----------------- ---------------- -------------- ------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
South Florida.................... 490 $109,800 356 $72,300
Central Florida.................. 187 34,800 300 56,200
West Coast Florida............... 54 9,000 201 33,900
Dallas, TX....................... 52 8,800 163 24,700
Denver, CO....................... 96 18,400 169 33,900
Virginia/Maryland................ 35 8,800 73 19,400
Raleigh, NC...................... 18 4,100 19 3,700
Atlanta, GA...................... 0 0 8 1,200
Phoenix, AZ...................... 0 0 155 32,800
----- ------------- ------ ----------
Total....................... 932 $193,700 1,444 $278,100
=== ======== ===== ========
</TABLE>
The increase in unit backlog at April 30, 1998 was due to a record
1,583 new homes sales during the six months ended April 30, 1998. This
represents an 82% increase in the number of new home sales contracts signed,
when compared with 870 contracts in the six months ended April 30, 1997. At
April 30, 1998, the Company was marketing 82 subdivisions, compared to 71
subdivisions at April 30, 1997, including 18 subdivisions in South Florida; 16
in Central Florida; 12 in West Coast Florida; 7 in Dallas, Texas; 11 in Denver,
Colorado; 6 in Virginia and Maryland; 3 in Raleigh, North Carolina; 3 in
Atlanta, Georgia and 6 in Phoenix, Arizona.
27
<PAGE>
RESULTS OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 COMPARED TO SIX MONTHS ENDED APRIL 30,
1997.
The Company's revenues from home sales for the six months ended April
30, 1998 increased $1.7 million (or 0.9%) compared to the same period in fiscal
1997. The number of homes delivered increased 5.7% (to 1,008 from 954) and the
average selling price of homes delivered decreased 4.4% (to $194,000 from
$203,000). The increase of revenues and homes delivered was primarily
attributable to a higher velocity of homes delivered in backlog during the six
months ended April 30, 1998 compared with the prior year period. Management
believes that changes in the average selling price of homes delivered from
period to period are attributable to discrete factors at each of its
subdivisions, including product mix and premium lot availability, and cannot be
predicted for future periods with any degree of certainty.
The Company's revenues from land sales increased approximately $4.8
million during the six months ended April 30, 1998, as compared to the same
period in fiscal 1997, primarily as a result of an increase in commercial land
sales at Pembroke Falls, a master-planned community in South Florida.
Cost of home sales decreased $500,000 (or 0.3%) compared to the same
period in fiscal 1997 primarily due to the product mix in home sale revenues.
Cost of home sales as a percentage of home sales were comparable for the six
months ended April 30, 1998 and the same period in fiscal year 1998.
The Company's selling, marketing, general and administrative ("S,G&A")
expenses increased approximately $3.3 million (or 17.1%) during the six months
ended April 30, 1998, as compared to the corresponding fiscal 1997 period,
primarily due to selling and marketing expenses associated with the increased
number of residential subdivisions and increased general and administrative
expenses associated with payroll costs. S,G&A expenses as a percentage of total
revenues for the six months ended April 30, 1998 increased to 10.6% compared to
9.5%, primarily due to the increased selling costs related to the increased
number of residential subdivisions for the period as compared to the prior year.
Primarily as a result of the increase in revenues, net income before
extraordinary item increased by $700,000 in the six months ended April 30, 1998
from the comparable period in fiscal 1997.
YEAR ENDED OCTOBER 31, 1997 COMPARED TO YEAR ENDED OCTOBER 31, 1996.
The Company's revenues from home sales during fiscal 1997 increased
$100.4 million (or 33.0%) compared to fiscal 1996. The number of homes delivered
by the Company increased 27.1% (to 1,992 from 1,567) and the average selling
price of homes delivered increased 4.6% (to $203,000 from $194,000). The
increase of revenues and homes delivered was primarily attributable to a higher
percentage of backlog being delivered during fiscal 1997. Management believes
that changes in the average selling price of homes delivered from period to
period are attributable to discrete factors at each of its subdivisions,
including product mix and premium lot availability, and cannot be predicted for
future periods with any degree of certainty.
The Company's revenues from land sales decreased approximately $9.9
million (or 56.3%) during fiscal 1997 as compared to fiscal 1996, primarily as a
result of a decrease in commercial and multi-family land sales at Pembroke
Falls.
Cost of home sales increased approximately $84.6 million (or 32.5%)
compared to fiscal 1996, primarily due to the related increase in home sales
revenues. Cost of home sales as a percentage of home sales decreased to 85.3%
from 85.7% as a result of the product mix of homes delivered.
Cost of land sales decreased approximately $8.5 million (or 54.5%)
during fiscal 1997 as compared to fiscal 1996, primarily as a result of the
decrease in land sales. Costs of land sales as a percentage of land sales
increased to 92.3% from 88.7%, which was primarily attributable to lower margin
single family lots available for sale. Margins from land sales at Pembroke Falls
in fiscal 1997 were comparable to fiscal 1996.
28
<PAGE>
The Company's S,G&A expenses increased approximately $7.7 million (or
24.2%) during fiscal 1997 as compared to fiscal 1996, primarily as a result of
variable selling costs associated with the greater number of homes closed and an
increase in selling expenditures related to an increase in the number of
residential subdivisions. S,G&A expenses as a percentage of total revenues
decreased from 9.6% in fiscal 1996 to 9.3% in fiscal 1997, primarily due to
certain economies of scale.
Fiscal 1997 income before income taxes increased $8.2 million (or
59.8%) as compared to fiscal 1996, primarily due to the increase in home sales
revenues.
YEAR ENDED OCTOBER 31, 1996 COMPARED TO YEAR ENDED OCTOBER 31, 1995.
The Company's revenues from home sales during fiscal 1996 increased
$87.9 million (or 40.7%) compared to fiscal 1995. The number of homes delivered
by the Company increased 37.8% (to 1,567 from 1,137) and the average selling
price of homes delivered increased 2.1% (to $194,000 from $190,000). The
increase of revenues and homes delivered was primarily attributable to the
record backlog of homes under contract at the beginning of fiscal 1996 and
improved sales activity in all homebuilding divisions as compared to fiscal
1995. Management believes that changes in the average selling price of homes
delivered from period to period are attributable to discrete factors at each of
its subdivisions, including product mix and premium lot availability, and cannot
be predicted for future periods with any degree of certainty.
The Company's revenues from land sales decreased approximately $3.4
million (or 16.2%) during fiscal 1996 as compared to fiscal 1995 primarily as a
result of a decrease in commercial and multi-family land sales at Pembroke
Falls.
Cost of home sales increased approximately $75.7 million (or 40.9%)
compared to fiscal 1995, primarily due to the related increase in home sales
revenues. Cost of home sales as a percentage of home sales is consistent with
fiscal 1995.
Cost of land sales decreased approximately $1.7 million (or 10.1%)
during fiscal 1996 as compared to fiscal 1995, primarily as a result of the
decrease in land sales. Costs of land sales as a percentage of land sales
increased to 88.7% from 82.7%, which was primarily attributable to lower margin
single family lots available for sale. Margins from land sales at Pembroke Falls
in fiscal 1996 were comparable to fiscal 1995.
The Company's S,G&A expenses increased approximately $7.4 million (or
30.4%) during fiscal 1996 as compared to fiscal 1995, primarily as a result of
selling costs associated with the greater number of homes closed and an increase
in selling expenditures related to an increase in the number of residential
subdivisions. S,G&A expenses as a percentage of total revenues decreased from
10.0% in fiscal 1995 to 9.6% in fiscal 1996, primarily due to economies of
scale.
Fiscal 1996 income before income taxes increased $4.2 million (or
43.7%) as compared to fiscal 1995, primarily due to the increase in home sales
revenues.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL. The Company's financing needs depend upon its construction
volume, asset turnover and land acquisitions. The Company has financed and
expects to continue to finance, its working capital needs through funds
generated by operations and borrowings. Funds for future land acquisitions and
construction costs are expected to be provided primarily by cash flows from
operations and future borrowing as permitted under the Company's bank credit
facilities.
At April 30, 1998, the Company had outstanding $17.9 million of
purchase money mortgages and bank borrowings of $41.4 million under its various
revolving lines of credit, and had available additional borrowings of $61.5
million. At April 30, 1998, the Company had two primary credit agreements (the
"Agreements") with various lending institutions which provided for a combined
$130.0 million collateralized revolving line of credit. Borrowings under these
Agreements bore interest at rates ranging from LIBOR plus 2.50% to prime plus
0.25% at
29
<PAGE>
the Company's election. Available borrowings under the Agreements were limited
to certain percentages of finished lots, construction costs, land and land under
development.
On May 28, 1998, the Company entered into the New Credit Facility. The
New Credit Facility provides for up to $170 million of unsecured borrowings.
Borrowings under the New Credit Facility generally bear interest at a
fluctuating rate based upon the prime rate as announced by SunTrust, the federal
funds rate or LIBOR. All outstanding borrowings under the New Credit Facility
are due in May 2001. The New Credit Facility contains various operating and
financial covenants and all of the Company's subsidiaries are guarantors of the
Company's obligations under the New Credit Facility. Available borrowings under
the New Credit Facility are limited to certain percentages of finished lots,
construction costs, land and land under development.
The New Credit Facility replaces all of the Company's secured lines of
credit, including the Agreements, other than the Warehouse Lines of Credit. All
amounts outstanding under the Agreements as of April 30, 1998, have been repaid
with the proceeds of borrowings under the New Credit Facility. As of June 9,
1998, the Company had $40 million outstanding under the New Credit Facility. The
Company believes that amounts generated from operations and additional
borrowings under the New Credit Facility will provide adequate funds to finance
its homebuilding activities and meet its debt service requirements for fiscal
year 1998.
On October 17, 1997, the Company announced the early redemption of
$15.0 million of its 7% Convertible Subordinated Notes due 2003 (the "1993
Notes"). On November 18, 1997, the Company redeemed approximately $14.6 million
aggregate principal amount of the 1993 Notes and $570,000 aggregate principal
amount of the 1993 Notes were converted by the holders thereof into 40,708
shares of Common Stock of the Company. The Company established a $15.0 million
short term unsecured credit facility to fund this redemption. During the three
months ended April 30, 1998, the Company redeemed an additional $4,000 aggregate
principal amount of the 1993 Notes and the remaining outstanding approximately
$14.8 aggregate principal amount of the 1993 Notes were converted by the holders
thereof into approximately 1.1 million shares of Common Stock.
On February 2, 1998, the Company consummated (i) an underwritten public
offering of 3,105,000 shares (including 405,000 shares issued pursuant to an
over-allotment option) of the Company's Common Stock and (ii) an underwritten
public offering of $100,000,000 aggregate principal amount of the Existing
Notes. The net proceeds to the Company from the these offerings was
approximately $137.2 million. The Company used such net proceeds as follows: (i)
$115.9 million to repay amounts outstanding under certain of the Company's
homebuilding lines of credit; (ii) $5.1 million to repay outstanding amounts
under the Company's financial services line of credit; and (iii) $16.2 million
for general corporate purposes.
Preferred Home Mortgage Company ("PHMC") has a warehouse line of credit
in the amount of $23.0 million which is guaranteed by the Company (the "Existing
Warehouse Line of Credit"). At April 30, 1998, PHMC had outstanding borrowings
of $19.6 million pursuant to the Existing Warehouse Line of Credit from
origination of mortgage loans. On May 27, 1998, PHMC entered into a new $25.0
million warehouse line of credit which is guaranteed by the Company (the "New
Warehouse Line of Credit" and, together with the Existing Warehouse Line of
Credit, the "Warehouse Lines of Credit."). All future borrowings by PHMC will be
made under the New Warehouse Line of Credit.
LAND ACQUISITION AND CONSTRUCTION FINANCING. The Company is continually
exploring opportunities to purchase parcels of land for its homebuilding
operations and is, at any given time, in various stages of proposing, making
offers for, and negotiating the acquisition of various parcels, whether outright
or through options. During the six months ended April 30, 1998, the Company
increased land inventories approximately $79.8 million to provide land for
continued growth.
The Company has increased its land development and construction
activities in response to current and anticipated demand and expects to pursue
additional land acquisition and development opportunities in the future.
However, the Company's ability to undertake significant additional projects is
expected to depend in part upon the availability of financing on satisfactory
terms. To date, the Company has not had any significant difficulties in securing
acquisition, development and construction financing and, except with respect to
major land acquisitions,
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<PAGE>
management believes that such financing will continue to be available on
satisfactory terms. However, there can be no assurance that sufficient financing
on satisfactory terms will continue to be available.
INFLATION
The Company, as well as the homebuilding industry in general, may be
adversely affected during periods of high inflation, primarily because of higher
land and construction costs. In addition, higher mortgage interest rates may
significantly affect the affordability of permanent mortgage financing to
prospective purchasers. Inflation also increases the Company's interest costs
and costs of labor and materials. The Company attempts to pass through to its
customers any increases in its costs through increased selling prices and, to
date, inflation has not had a material adverse effect on the Company's results
of operations. However, there is no assurance that inflation will not have a
material adverse impact on the Company's future results of operation.
INTEREST RATES
The Company's operations are interest rate sensitive. Overall housing
demand is adversely affected by increases in interest costs. If mortgage
interest rates increase significantly, this may negatively impact the ability of
a home buyer to secure adequate financing. Such results of higher interest rates
may result in adversely affecting the Company's revenues, gross margins and net
income.
YEAR 2000 ISSUES
The Company conducts its business primarily with commercial software
provided by third party vendors. After an analysis of the Company's exposure to
the impact of year 2000 issues, management believes that such commercial
software is substantially year 2000 compliant, and that completion of the year
2000 compliance is not expected to have a material impact on the Company's
business, operations or financial condition. Management is not in a position to
evaluate the extent, if any, to which any year 2000 issues that may affect the
economy generally or any of its subcontractors, suppliers or vendors in
particular would also be likely to affect the Company.
NEW FASB PRONOUNCEMENTS
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share" ("SFAS No. 128"), issued in February 1997, replaces the current
methodology for calculating and presenting earnings per share. Under SFAS No.
128, primary earnings per share will be replaced with a presentation of basic
earnings per share and fully diluted earnings per share will be replaced with
diluted earnings per share. Basic earnings per share excludes dilution and is
computed by dividing income available to common shares outstanding for the
period by the weighted average of common shares outstanding. Diluted earnings
per share is computed similarly to fully diluted earnings per share in
accordance with the Accounting Principles Board ("APB") Opinion No. 15. The
Company adopted SFAS No. 128 in the six months ended April 30, 1998. The impact
of the adoption of SFAS No. 128 has not been material.
SFAS No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"),
establishes standards for reporting and display of comprehensive income, its
components and accumulated balances. Comprehensive income is defined to include
all changes in equity except those resulting from investments by owners and
distributions to owners. Among other disclosures, SFAS No. 130 requires that all
items that are required to be recognized under current accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements.
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131"), which supersedes SFAS No. 14, "Financial
Reporting for Segments of a Business Enterprise," establishes standards for the
way that public enterprises report information about operating segments in
annual financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the public. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. SFAS No. 131 defines operating segments as
components of an enterprise about which separate financial
31
<PAGE>
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate the resources and in assessing
performance.
Both SFAS No. 130 and No. 131, issued in June 1997, are effective for
financial statements for periods beginning December 15, 1997 and require
comparative information for earlier years to be restated. Due to the recent
issuance of these standards, management has been unable to fully evaluate the
impact, if any, they may have on future financial statement disclosures.
32
<PAGE>
BUSINESS
GENERAL
Engle Homes, Inc. designs, constructs, markets and sells detached
single-family residences, townhomes, patio homes and condominiums to entry level
and move-up buyers, retirees and second-home, seasonal buyers. Engle operates in
nine geographic markets: Broward County, Palm Beach County and Martin County in
South Florida; Orlando in Central Florida; Tampa, Sarasota, Naples and Fort
Myers on the west coast of Florida; Denver, Colorado; Dallas, Texas; Virginia
and Maryland; Raleigh, North Carolina; Phoenix, Arizona; and Atlanta, Georgia.
The Company offers a variety of home styles at prices ranging from approximately
$80,000 to over $400,000 with an average sales price in fiscal 1997 of
approximately $203,000. In addition, the Company operates a mortgage company
which provides mortgages primarily to its home buyers in all of its geographic
markets and a title company which provides services to its home buyers and third
parties in Florida and Denver, Colorado.
Engle is a leading Florida homebuilder. The Company believes that it is
the number two and number four builder of single-family homes in South Florida
and Central Florida, respectively, based on revenues from unit closings for the
twelve months ended June 30, 1997. Florida is the number one homebuilding state
in the United States in terms of total housing starts. In addition, Florida is
currently the fourth largest state based upon total population and has
consistently ranked among the top four states in population growth over the past
seven decades.
Since 1993, Engle has expanded into eight of the top 20 homebuilding
markets in the nation through both start-up operations and the acquisition of a
homebuilder in Denver, Colorado. In fiscal 1997, approximately 32% of the
Company's revenues from home sales were generated outside of the Florida markets
as compared to none in fiscal 1993. Most recently, in fiscal 1997 Engle entered
both the Phoenix, Arizona and Atlanta, Georgia markets through start-up
operations.
Over the past five years, the Company's total revenues have grown from
$137.4 million in fiscal 1993 to $425.3 million in fiscal 1997, with annual
EBITDA growing from $15.9 million to $40.3 million over the same period,
representing compound annual growth rates of 33% and 26%, respectively. The
Company's fiscal 1997 total revenues of $425.3 million and EBITDA of $40.3
million were the highest in the Company's history. The number of homes delivered
increased from 797 in fiscal 1993 to 1,992 in fiscal 1997. At the end of fiscal
1997, Engle was marketing homes in 68 communities.
BUSINESS STRATEGY
Engle believes that its success has been due to its market-oriented
approach which it applies to each of the following: (i) identifying new markets;
(ii) acquiring land; and (iii) diversifying its product offerings and price
ranges to appeal to most segments of the home buying public. Engle believes that
this strategy enables it to respond more rapidly to changing market conditions.
EXPAND IN EXISTING AND NEW MARKETS. The Company has successfully
expanded its operations through both start-up operations in new and existing
markets and the acquisition of a homebuilder in Denver, Colorado. Within its
existing markets, the Company believes that it is able to gain greater market
share by increasing the number of residential projects, thereby leveraging its
existing management structure and enhancing profitability through economies of
scale. As part of its strategy to further diversify geographically, the Company
continually seeks and evaluates market expansion opportunities, including
potential acquisitions of homebuilding companies. The Company seeks to expand
into geographic markets with significant single-family home permit activity,
substantial job growth, a diversified economy and an availability of strong
management with local market expertise. Since its initial public offering in
January 1992, the Company has expanded into eight new geographic markets.
OFFER A BROAD SELECTION OF PRODUCTS. The Company designs its homes to
appeal to a wide variety of home buyers, including entry level and move-up
buyers, retirees and second-home, seasonal buyers. Accordingly, the Company
offers a number of home styles and price ranges at various locations in each
market, including golf and waterfront communities in certain markets. Engle's
product offerings include semi-custom estate homes, detached
33
<PAGE>
single-family residences, townhomes, semi-detached patio-homes, duplexes and
condominiums. Management believes that the Company's long-standing policy of
product diversification enables it to respond more rapidly to changing market
conditions.
SELECTIVELY ACQUIRE LAND. The Company maintains a land acquisition
policy designed to enhance profitability and return on capital while minimizing
the risks associated with investments in land. Engle seeks to identify and
acquire superior locations in each market and offer a number of communities with
diverse products and sales prices. The Company prefers to acquire improved
residential lots ready for construction by entering into option contracts,
whenever possible, or through outright purchases. The Company also acquires
tracts of land that require site improvements prior to the start of home
construction. Occasionally, Engle purchases larger parcels of undeveloped land
suited for master-planned communities, primarily in South Florida. When
acquiring larger parcels, the Company typically contracts to sell portions of
improved or unimproved land to other builders as a source of additional revenue
thereby reducing the Company's investment. In addition, when economically
advantageous to the Company, Engle enters into partnership or joint venture
agreements with other major homebuilders to purchase and develop well located
parcels of land. The Company generally purchases land only after required zoning
entitlements have been obtained.
MAINTAIN STRINGENT COST CONTROLS. The Company believes that maintaining
stringent cost controls is a key factor in achieving profitability. The Company
seeks to reduce its costs and risks by (i) obtaining required zoning
entitlements prior to purchasing land, (ii) using subcontractors to perform home
construction and site improvement work on a fixed price basis, (iii) minimizing
inventory of unsold homes, (iv) improving construction cycle time for new homes,
(v) using its position as a leading homebuilder to obtain national volume
discounts on construction materials and favorable pricing from subcontractors
and (vi) maintaining a sophisticated management information system that allows
it to monitor homebuilding production, scheduling and budgeting on a daily
basis.
COMMITMENT TO CUSTOMER SATISFACTION. The Company is dedicated to
providing customer satisfaction through quality construction and customer
service. Divisional managers are responsible for the quality of construction and
the level of customer satisfaction in their respective divisions.
EXPERIENCED MANAGEMENT WITH DECENTRALIZED OPERATING STRUCTURE. To serve
the needs of each of its markets, the Company relies upon the expertise of its
division managers, each of whom has significant experience in the homebuilding
industry. In order to align corporate and divisional profit goals, division
managers receive bonuses based on the return on assets of their respective
divisions. The division managers benefit from Engle's corporate expertise in
sales and marketing, land acquisition, financial services and its centralized
accounting department. The Company believes that this interaction between the
divisional managers and corporate management provides enhanced operating
results.
LAND ACQUISITION AND DEVELOPMENT
The Company prefers to acquire improved residential lots ready for
construction by entering into option contracts, whenever possible, or through
outright purchases. The Company also acquires tracts of land that require site
improvements prior to the start of home construction. Occasionally, the Company
purchases larger tracts of land with the intention of reselling portions of the
tracts to other builders as a source of additional revenue. Specifically, the
Company purchased large tracts of land and sold parcels to other builders in
connection with the development of its master-planned communities, including
Embassy Lakes, North Passage, Lakeside Green and currently, Pembroke Falls.
Unlike the Company's more typical subdivision projects, the Company's
master-planned communities have involved significantly larger tracts of land,
greater planning and site improvement activities and the development of more
extensive recreational facilities and related amenities. The Company's master-
planned communities normally take five or more years to complete depending on
the project's size, economic conditions prevailing at the time and the Company's
strategy for the particular project. Engle's more traditional residential
developments usually take two to three years to complete.
Management believes that the Company's Pembroke Falls project
exemplifies the opportunities available to the Company when developing
master-planned communities. In February 1994, the Company acquired this
approximately 1,500 acre parcel located in southwest Broward County, Florida, a
rapidly developing housing
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<PAGE>
market. The purchase price for the Pembroke Falls parcel was $25.7 million, or
approximately $17,100 per acre. The Company expects to build approximately 2,000
single-family housing units and has sold most of the approximately 222 acres of
land zoned for commercial and multi-family use. Through October 31, 1997,
approximately $45.4 million in land sales contracts had been written, of which
$34.5 million closed through fiscal 1997. Of the remaining $10.9 million in
contracts, $8.3 million are binding contracts, and $2.6 million are contingent
upon completion of an inspection period during the next ninety days. Management
believes that the purchase of this relatively large parcel enabled the Company
to obtain desirable land inventory in its South Florida division for future
development at a lower cost than if the Company had purchased smaller parcels
available for immediate construction of homes.
The Company's land purchase agreements are typically subject to
numerous conditions, including, but not limited to, the Company's ability to
obtain necessary zoning and other governmental approvals for the proposed
subdivision. During the contingency period, the Company also confirms the
availability of utilities, conducts hazardous waste and other environmental
analysis, and completes its marketing feasibility studies.
The Company expends considerable effort in developing a design and
marketing concept for each of its subdivisions, which includes determination of
size, style and price range of the homes and, in certain projects, layout of
streets, layout of individual lots and overall community design. The product
line offered in a particular subdivision depends upon many factors, including
housing generally available in the area, the needs of the particular market and
the Company's costs of lots in the subdivision. The Company, where necessary,
undertakes development activities that include government approvals, site
planning, engineering, as well as constructing roads, sewer, water and drainage
facilities and, where applicable for recreational facilities and other
amenities.
At April 30, 1998, the Company was marketing 82 subdivisions, compared
to 71 subdivisions at April 30, 1997, including 18 subdivisions in South
Florida; 16 in Central Florida; 12 in West Coast Florida; 7 in Dallas, Texas; 11
in Denver, Colorado; 6 in Virginia and Maryland; 3 in Raleigh, North Carolina; 3
in Atlanta, Georgia and 6 in Phoenix, Arizona. The Company's residential real
estate inventory at April 30, 1998 was as follows:
<TABLE>
<CAPTION>
HOMES UNDER CONSTRUCTION LOTS AVAILABLE FOR FUTURE CONSTRUCTION
------------------------------------ ------------------------------------------
TOTAL LOTS SPECULATIVE
DIVISION AVAILABLE SOLD(1) (2) MODELS SOLD(1) UNSOLD OPTIONS
- ----------------------------- ----------- ----------- ------------- -------- -------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
South Florida(3)........... 3,609 (4) 205 175 14 151 2,930 134
Central Florida(5)......... 1,554 127 29 22 173 650 553
West coast Florida(6)...... 2,899 (7) 92 33 15 109 2,200 450
Denver, CO................. 1,102 101 40 3 68 409 481
Dallas, TX................. 978 44 17 9 119 272 517
Virginia and Maryland...... 255 51 19 7 22 99 57
Raleigh, NC................ 246 15 12 1 4 214 --
Phoenix, AZ................ 1,046 94 17 5 61 560 309
Atlanta, GA................ 619 2 4 2 6 197 408
----------- ----------- ------------- -------- -------------- ---------- ----------
Total................... 12,308 731 346 78 713 7,531 2,909
=========== =========== ============= ======== ============== ========== ==========
</TABLE>
- ------------------------
(1) Under contract, but not delivered. See the discussion of the Company's
backlog under "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
(2) Speculative units are unsold homes that are completed or under
construction.
(3) South Florida refers to Broward County, Palm Beach County and Martin
County.
(4) Includes 1,552 remaining lots in Pembroke Falls.
(5) Central Florida refers to Orlando.
(6) Florida's west coast refers to Tampa, Sarasota, Naples and Fort Myers.
(7) Includes 871 lots in Lake Bernadette in Tampa.
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<PAGE>
CONSTRUCTION
The Company acts as the general contractor for the construction of its
residential developments. Company employees monitor the construction of each
project, participate in all material design and building decisions, coordinate
the activities of subcontractors and suppliers, subject their work to quality
and cost controls and monitor compliance with zoning and building codes.
Subcontractors typically are retained for a specified project pursuant to a
contract which obligates the subcontractor to complete construction at a fixed
price.
The Company does not maintain significant inventories of construction
materials except for work in process, materials for homes under construction and
a limited amount of other construction materials. Generally, the construction
materials used in the Company's operations are readily available from numerous
sources.
MARKETING AND SALES
The Company sells its homes primarily through commissioned employees,
who typically work from sales offices located at the model homes in each Engle
subdivision, as well as through cooperating independent brokers. In all
instances, Company personnel are available to assist prospective buyers by
providing them with floorplans, price information, tours of model homes and the
selection of options and upgrades. Options and upgrades are generally priced to
have a positive effect on profit margins. Sales personnel are trained by the
Company and attend periodic meetings to be updated on the availability of
financing, construction schedules, marketing and advertising plans.
The Company advertises in newspapers, magazines and on billboards.
Engle also uses out-of-state home shows, radio, video tapes, direct mail
advertising, special promotional events, illustrated brochures and model homes
in its comprehensive marketing program. In addition, Engle maintains a web site
on the Internet. The Company also uses a cross-referral program that encourages
Company personnel to direct customers to other Engle subdivisions based on the
customers' needs.
CUSTOMER SERVICE AND QUALITY CONTROL
The Company's customer service department is responsible for
pre-closing and post-closing customer needs. Prior to closing, a Company
employee accompanies the buyer on a home orientation and inspection tour. The
Company is continuing with its objective to provide quality construction through
on-going training programs to maintain its high quality construction standards.
The Company also provides home buyers with a limited warranty program which, in
general, provides a home buyer with a one-year warranty on workmanship and
building materials and a ten-year structural warranty. In addition, the Company
purchases, when required by local or state ordinances, builder liability
insurance for major structural defects.
FINANCIAL SERVICES
The Company's financial services subsidiaries provide mortgage banking
and title insurance services. For fiscal 1997, the financial services
subsidiaries increased their profitability to $2.7 million, an increase of 49%
compared to fiscal 1996.
MORTGAGE BANKING. In April 1992, the Company established PHMC. PHMC is
a full service mortgage banker which arranges financing through the origination
of mortgage loans to the Company's home buyers and to a lesser extent third
party loans that are not associated with homes built by the Company. PHMC is an
approved lender by the Federal National Mortgage Association ("FNMA") to deliver
loan origination to FNMA and to other investors and to service such loans.
During fiscal 1997, PHMC originated and sold approximately $138.0
million in mortgage loans (including servicing rights), representing a
significant portion of the Company's home buyers that requested mortgage
financing. Substantially all of PHMC's revenues are derived from mortgages on
homes built by Engle. At April 30, 1998, PHMC was originating mortgages in
substantially all Engle homebuilding divisions.
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<PAGE>
PHMC must comply with various federal and state laws and consumer
credit rules and regulations in connection with its mortgage lending activities.
In addition, the mortgage banking industry in the United States is highly
competitive. PHMC competes with other mortgage companies and financial
institutions to provide mortgage financing to both the Company's customers as
well as the general public.
TITLE SERVICES. In September 1992, the Company purchased all the
outstanding common stock of the Title Store, Inc. In May 1994, the Company
acquired all the capital stock of Universal Land Title, Inc. ("ULT"), a company
that sells, but does not underwrite, title policies and simultaneously merged
with the Title Store, Inc. to form one company. ULT currently provides title
services to the Company's home buyers in Florida and Denver, Colorado, as well
as third parties. At April 30, 1998, ULT was operating 15 offices in Florida and
four offices in Denver, Colorado.
GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS
In developing housing communities, the Company must obtain the approval
of numerous government authorities regulating such matters as permitted land
uses and levels of density, the installation of utility services such as water
and waste disposal and the dedication of acreage for open space, parks, schools
and other community purposes. Several authorities in Florida and other states
have imposed impact fees as a means of defraying the cost of providing certain
governmental services to developing areas and the amount of these fees has
increased significantly during recent years. Many state laws require the use of
specific construction materials which reduce the need for energy-consuming
heating and cooling systems. Local governments also, at times, declare
moratoriums on the issuance of building permits and impose other restrictions in
areas where sewage treatment facilities and other public facilities do not reach
minimum standards. To date, the governmental approval processes and the
restrictive zoning and moratoriums discussed above have not had a material
adverse effect on the Company's development activities. However, there is no
assurance that these and other restrictions will not adversely affect the
Company in the future. The Company is also subject to a variety of Federal,
State and local statutes, ordinances, rules and regulations concerning
protection of health and the environment. The particular environmental laws
which apply to any given community vary greatly according to the community site,
the site's environmental conditions and the present and former uses of the site.
These environmental laws may result in delays, cause the Company to incur
substantial compliance and other costs and prohibit or severely restrict
development in certain environmentally sensitive regions or areas. Prior to
consummating the purchase of land, the Company engages independent environmental
engineers to evaluate such land for the presence of hazardous or toxic
materials, wastes or substances. The Company has not been materially affected to
date by the presence or potential presence of such materials.
To varying degrees, certain permits and approvals will be required to
complete the residential developments currently being planned by the Company.
The ability of the Company to obtain necessary approvals and permits for these
projects is often beyond the Company's control, and could restrict or prevent
the development of otherwise desirable property. The length of time necessary to
obtain permits and approvals increases the carrying costs of unimproved property
acquired for the purpose of development and construction. In addition, the
continued effectiveness of permits already granted is subject to factors such as
changes in policies, rules and regulations and their interpretation and
application. To minimize these risks, the Company generally restricts land
purchases to tracts that have zoning entitlements.
In recent years, regulation by Federal and state authorities relating
to the sale and advertising of residential real estate has also become more
restrictive. In order to advertise and sell condominiums and other residential
real estate in many jurisdictions, the Company has been required to prepare
registration statements or other disclosure documents and, in some cases, to
file such materials with designated regulatory agencies.
COMPETITION AND MARKET FACTORS
The development and sale of residential properties is highly
competitive and fragmented. The Company competes in each of its markets with
numerous national, regional and local builders, including some builders with
greater financial resources. Builders of new homes compete not only for home
buyers, but also for desirable
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<PAGE>
properties, raw materials and skilled subcontractors. The Company also competes
for residential sales with individual sales of existing homes and available
rental housing.
The housing industry is cyclical and affected by consumer confidence
levels, prevailing economic conditions generally and, in particular, by interest
rate levels. A variety of other factors affect the housing industry and demand
for new homes, including the availability of labor and materials and increases
in the costs thereof, changes in costs associated with home ownership such as
increases in property taxes and energy costs, changes in consumer preferences,
demographic trends and the availability of and changes in mortgage financing
programs.
EMPLOYEES
At April 30, 1998, the Company employed approximately 685 persons,
including sales and marketing personnel, executive, administrative and clerical
personnel, construction employees and financial services personnel.
Although none of the Company's employees are covered by collective
bargaining agreements, certain of the subcontractors which the Company engages
are represented by labor unions or are subject to collective bargaining
agreements. The Company believes that its relations with its employees and
subcontractors are good.
PROPERTIES
The Company's corporate office is located at 123 N.W. 13th Street,
Suite 300, Boca Raton, Florida 33432, where the Company leases 9,356 square feet
of office space for a term expiring in August 2006. Engle's building divisions,
PHMC and ULT branch operations lease additional office space at various
locations for their day-to-day operations. Management believes that the current
leased offices are adequate for its needs for the foreseeable future.
LEGAL PROCEEDINGS
The Company is involved from time to time in litigation arising in the
ordinary course of business, none of which is expected to have a material
adverse effect on the Company's consolidated financial position or results of
operations.
38
<PAGE>
MANAGEMENT
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information as of April 30,
1998, regarding each of the Company's executive officers, directors and other
key employees:
NAME AGE POSITION WITH COMPANY
<S> <C> <C>
Alec Engelstein................................ 67 Chairman of the Board, President and
Chief Executive Officer
Harry Engelstein............................... 63 Executive Vice President, Chief Construction
Officer and Director
John A. Kraynick............................... 43 Senior Vice President and Director
Lawrence R. Shawe.............................. 42 Vice President--Sales and Marketing
David Shapiro.................................. 42 Vice President--Finance, Chief Financial
Officer and Director
Paul M. Leikert................................ 42 Vice President--Chief Accounting Officer
Henry H. Fishkind, Ph.D........................ 48 Director
Ronald J. Korn................................. 57 Director
Alan L. Shulman................................ 65 Director
</TABLE>
ALEC ENGELSTEIN, a co-founder and Chairman of the Board of the Company,
has served as its President and Chief Executive Officer since its organization
in August 1982. Alec Engelstein has over 35 years of experience in the
homebuilding industry and has been actively engaged as a homebuilder in
southeast Florida since 1969.
HARRY ENGELSTEIN, a co-founder and director of the Company and Alec
Engelstein's brother, has served as Executive Vice President and Chief
Construction Officer since the Company's inception in August 1982. Harry
Engelstein has over 30 years of experience in home construction.
JOHN A. KRAYNICK has served as a Vice President of the Company since
August 1986 and was appointed Senior Vice President in July 1991. Mr. Kraynick
is responsible for administrative matters and coordinating the Company's
compliance with Federal, state and local regulatory requirements. Mr. Kraynick
has over 19 years of experience in the homebuilding industry.
LAWRENCE R. SHAWE has served as the Company's Vice President--Sales and
Marketing since April 1986. Mr. Shawe joined the Company in April 1984 and since
such time has been responsible for the Company's sales and marketing efforts.
Mr. Shawe has over 17 years of experience in the homebuilding industry.
DAVID SHAPIRO joined the Company in June 1991, has served as the
Company's Chief Financial Officer since July 1991, was appointed Vice
President--Finance in October 1991 and was appointed as a director on December
17, 1997. From January 1986 until June 1991, he served as vice president of a
privately held retail clothing company located in West Palm Beach, Florida.
David Shapiro is Alec Engelstein's son-in-law.
PAUL M. LEIKERT joined the Company in 1992 and has served as the Vice
President--Chief Accounting Officer since March 1994. Mr. Leikert is a certified
public accountant and has over 13 years of experience in the homebuilding
industry.
HENRY H. FISHKIND, PH.D., has served as a director of the Company since
October 1991 and is a member of the Compensation and Audit Committees of the
Board of Directors. Dr. Fishkind has served as President of Fishkind &
Associates, Inc., an economic and financing consulting firm based in Orlando,
Florida, since 1988. From January 1984 until December 1987, Dr. Fishkind served
as president of M.G. Lewis Econometrics, Inc., the research subsidiary of an
investment banking firm based in Winter Park, Florida. Dr. Fishkind also serves
as editor of Econocast, a quarterly economic forecast, since 1984, and as a
director of Summit Properties.
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<PAGE>
RONALD J. KORN, chairman of the Compensation and Audit Committees of
the Board of Directors, has served as a director of the Company since October
1991. Since July 1991, Mr. Korn has served as President of Ronald Korn
Consulting, a business consulting firm, and as Chairman of the Board of Carole
Korn Interiors, Inc., an interior design firm. From August 1985 until June 1991,
Mr. Korn served as the managing partner of the Miami office of KPMG Peat
Marwick, a nationally recognized firm of independent public accountants. Mr.
Korn also serves as a director of Vacation Break USA, Inc., which develops,
markets, operates and finances vacation ownership interests in premium resort
properties and as a director of Magicworks Entertainment, Inc., which produces,
manages, promotes and merchandises live entertainment.
ALAN L. SHULMAN was appointed as a director of the Company on December
17, 1997. Mr. Shulman is currently a private investor. Mr. Shulman served on the
board of directors of Island National Bank in Palm Beach, Florida from its
inception in 1989 until April 1, 1997 and currently serves on the board of
directors of CV Reit, Inc., a New York Stock Exchange listed company.
There are no arrangements or understandings with respect to the
selection of officers or directors.
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DESCRIPTION OF THE EXCHANGE NOTES
The Exchange Notes will be issued, and the Private Notes were issued,
under an Indenture, dated as of June 12, 1998 (the "Indenture"), among the
Company, the Guarantors and American Stock Transfer & Trust Company, as Trustee
(the "Trustee"). The terms of the Exchange Notes include those stated in the
Indenture and, upon effectiveness of this Registration Statement, those made
part of the Indenture by the Trust Indenture Act of 1939, as amended (the
"TIA"). The following summary of certain provisions of the Indenture, the
Exchange Notes and the Guarantees does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, the TIA, and to all of the
provisions of the Indenture, including the definitions of certain terms therein
and those terms made a part of the Indenture by reference to the TIA as in
effect on the date of the Indenture. The Indenture has been filed with the
Commission as an exhibit to the Registration Statement, of which this Prospectus
forms a part.
The definitions of certain capital terms used in the following summary are set
forth under "-- Certain Definitions" below.
GENERAL
The Indenture provides for the issuance of up to $150 million principal
amount of 9 1/4% Series C Senior Notes due 2008 to permit the Company to issue
the Exchange Notes for all of the outstanding Existing Notes and Private Notes.
The Indenture also provides the Company the flexibility of issuing additional
Notes in the future; however, any issuance of additional Notes would be subject
to the covenant described under "--Certain Covenants - Limitation on Debt." Any
such additional Notes, the Private Notes and the Exchange Notes are collectively
referred to as the "Notes" in this "Description of the Exchange Notes."
The Notes will mature on February 1, 2008. The Notes will bear interest
from the date of issuance, or from the most recent date to which interest has
been paid or provided for, at the rate stated on the cover page hereof, payable
in arrears on February 1 and August 1 of each year, commencing August 1, 1998,
to the persons in whose names the Notes are registered at the close of business
on the immediately preceding January 15 and July 15, respectively. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
The Notes will be general unsecured obligations of the Company, ranking
senior in right of payment to all existing and future subordinated indebtedness
of the Company and pari passu in right of payment with all existing and future
senior indebtedness of the Company, including the Existing Notes and the New
Credit Facility; however, the Notes will be effectively subordinated to all
secured indebtedness of the Company and the Guarantors to the extent of the
value of the assets securing such indebtedness. Currently, the Company and the
Guarantors collectively have no secured indebtedness outstanding other than the
Warehouse Lines of Credit. See "Summary--Recent Developments--New Credit
Facility," "Risk Factors--Holding Company Structure; Fraudulent Conveyance
Concerns" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."
Principal and premium, if any, and interest on the Notes are to be
payable, and the Notes will be exchangeable and transfers thereof will be
registrable, at the offices of the Company's agent maintained for such purposes
in The City of New York; provided that payment of interest may, at the option of
the Company, be made by check mailed to a holder at his registered address.
The Notes will be issued only in fully registered form without coupons,
in denominations of $1,000 and any integral multiple thereof. The Notes are
exchangeable and transfers thereof will be registered without charge therefor,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
Any Private Notes that remain outstanding after the completion of the
Exchange Offer, together with the Exchange Notes issued in exchange for Private
Notes and Existing Notes, will be treated as a single class of debt securities
under the Indenture.
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THE GUARANTEES
Each of the Guarantors will (so long as they remain Subsidiaries of the
Company) unconditionally guarantee (each a "Guarantee") on a joint and several
basis all of the Company's obligations under the Notes, including its
obligations to pay principal, premium, if any, and interest with respect to the
Notes. The Guarantees will be general unsecured obligations of the Guarantors,
ranking senior in right of payment to all existing and future subordinated
indebtedness of the Guarantors and pari passu in right of payment with all
existing and future senior indebtedness of the Guarantors, including the
Existing Guarantees and the New Credit Facility Guarantees; however, the
Guarantees will be effectively subordinated to all secured indebtedness of the
Guarantors to the extent of the value of the assets securing such indebtedness.
See "Risk Factors--Holding Company Structure; Fraudulent Conveyance Concerns."
Except as provided in "Certain Covenants" below, the Company is not restricted
from selling or otherwise disposing of any of the Guarantors.
The Indenture provides that each Restricted Subsidiary (other than, in
the Company's discretion, any Restricted Subsidiary the assets of which have a
book value of not more than $1,000,000) will be a Guarantor.
The Indenture provides that if all or substantially all of the assets
of any Guarantor or all of the capital stock of any Guarantor is sold (including
by issuance or otherwise) by the Company or any of its Subsidiaries in a
transaction constituting an Asset Sale, and if the Net Proceeds from such Asset
Sale are used in accordance with the covenant "Limitation on Asset Sales," then
such Guarantor (in the event of a sale or other disposition of all of the
capital stock of such Guarantor) or the corporation acquiring such assets (in
the event of a sale or other disposition of all or substantially all of the
assets of such Guarantor) shall be released and discharged of its Guarantee
obligations.
OPTIONAL REDEMPTION
The Notes are redeemable at the option of the Company, in whole or in
part (in any integral multiple of $1,000), at any time on or after February 1,
2003, on not less than 30 days nor more than 60 days notice mailed to the
registered holders thereof at their last registered addresses, at the following
redemption prices (expressed as percentages of the principal amount thereof),
plus accrued and unpaid interest, if any, to the redemption date, if redeemed
during the twelve-month period beginning on February 1, of the year listed
below:
YEAR PERCENTAGE
- ---- ----------
2003............................................................. 104.625%
2004............................................................. 103.083%
2005............................................................. 101.542%
2006 and thereafter.............................................. 100.000%
In addition, if the Company consummates one or more public offerings of
its Common Stock subsequent to the June 8, 1998 and on or prior to February 1,
2001, the Company may, at its option, redeem up to 33% of the original aggregate
principal amount of the Notes with the net proceeds of such offerings at
109.250% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the redemption date; provided, however, that immediately after giving
effect to any such redemption not less than 67% of the original aggregate
principal amount of the Notes remains outstanding.
If less than all of the Notes are to be redeemed, the Trustee will
select the particular Notes (or the portions thereof) to be redeemed either by
lot, pro rata or by such other method as the Trustee shall deem fair and
appropriate, but in any such event, in such manner as complies with applicable
legal and stock exchange requirements. On or after the redemption date, interest
will cease to accrue on the Notes or portions thereof called for redemption.
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CERTAIN COVENANTS
CHANGE OF CONTROL.
In the event of a Change of Control (as defined below), each holder of
Notes shall have the right upon receipt of a Change of Control Notice (as
defined below), at such holder's option, to require the Company to repurchase
all of such holder's Notes, or a portion thereof which is $1,000 or any integral
multiple thereof, on the date (the "Change of Control Repurchase Date") that is
45 days after the date of the Change of Control Notice at a price equal to 101%
of the principal amount thereof, plus accrued interest to the Change of Control
Repurchase Date.
Within 30 days after the occurrence of a Change of Control, the Company
or, at the request of the Company, the Trustee, shall deliver to all holders of
record of the Notes a notice (the "Change of Control Notice") of the occurrence
of such Change of Control and of the repurchase right arising as a result
thereof. The Company shall deliver a copy of the Change of Control Notice to the
Trustee. To exercise the repurchase right, on or before the 30th day after the
date of the Change of Control Notice, holders of Notes must deliver written
notice to the Company (or an agent designated by the Company for such purposes)
of the holder's exercise of such right, together with the Notes with respect to
which the right is being exercised, duly endorsed for transfer. Such written
notice shall be irrevocable.
The right to require the repurchase of Notes shall not continue after a
discharge of the Company from its obligations under the Notes and the Indenture
with respect to the Notes in accordance with the Indenture as described under
"--Defeasance" below.
If the Change of Control Repurchase Date is between a regular record
date for the payment of interest and the next succeeding interest payment date,
any Note to be repurchased must be accompanied by funds equal to the interest
payable on such succeeding interest payment date on the principal amount to be
repurchased (unless such Note shall have been called for redemption, in which
case no such payment shall be required), and the interest on the principal
amount of the Note being repurchased will be paid on such next succeeding
interest payment date to the registered holder of such Note on the immediately
preceding record date. A Note repurchased on an interest payment date need not
be accompanied by any payment, and the interest on the principal amount of the
Note being repurchased will be paid on such interest payment date to the
registered holder of such Note on the immediately preceding record date.
As used herein, a "Change of Control" of the Company means the
occurrence of any of the following events: (a) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act), excluding the
Permitted Holders (as defined below), is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that such
person has the right to acquire, whether such right is exercisable immediately,
after the passage of time, upon the happening of an event or otherwise),
directly or indirectly, of more than 50% of the total Voting Stock (as defined
below) of the Company; but only if the Permitted Holders do not have the right
or ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of the Company; (b) the Company
consolidates with, or merges with or into, another Person or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, or any Person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where immediately
after such transaction no "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), excluding the Permitted Holders,
is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire, whether
such right is exercisable immediately, after the passage of time, upon the
happening of an event or otherwise), directly or indirectly, of more than 50% of
the total Voting Stock of the surviving or transferee corporation; but only if
the Permitted Holders do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of
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the Board of Directors of the Company; (c) at any time during any consecutive
two-year period, individuals who at the beginning of such period constituted the
Board of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office; or (d) the Company is liquidated or
dissolved or adopts a plan of liquidation. "Permitted Holders" shall mean Alec
Engelstein and Harry Engelstein and their respective estates, affiliates and
associates (as such terms are defined in the Securities Act). "Voting Stock"
shall mean, with respect to any Person, capital stock of any class or kind
normally entitled to vote in the election of the board of directors or other
governing body of such Person.
If any repurchase pursuant to the foregoing provisions constitutes a
tender offer as defined under the Exchange Act, the Company will comply with the
requirements of Rule l4e-1 and any other tender offer rules under the Exchange
Act which then may be applicable. The Company could, in the future, enter into
certain significant transactions that would not constitute a Change of Control
with respect to the Change of Control purchase feature of the Notes. The Change
of Control purchase feature of the Notes may in certain circumstances make more
difficult or discourage a takeover of the Company and, thus, the removal of
incumbent management. The Change of Control purchase feature, however, is not
the result of management's knowledge of any specific effort to obtain control of
the Company by means of a merger, tender offer, solicitation or otherwise, or
part of a plan by management to adopt a series of anti-takeover provisions.
The meaning of the phrase "all or substantially all" as used in the
Indenture in the definition of "Change of Control" with respect to a sale of
assets varies according to the facts and circumstances of the subject
transaction, has no clearly established meaning under relevant law and is
subject to judicial interpretation. Accordingly, in certain circumstances, there
may be a degree of uncertainty in ascertaining whether a particular transaction
would involve a disposition of "all or substantially all" of the assets of the
Company, and therefore it may be unclear whether a Change of Control has
occurred and whether the Notes are subject to a Change of Control Offer.
MAINTENANCE OF NET WORTH.
In the event that the Company's Net Worth at the end of each of any two
consecutive fiscal quarters (the last day of such second fiscal quarter being
referred to as the "Trigger Date") is less than $35,000,000 (the "Minimum Net
Worth"), then the Company shall make an offer to all holders (a "Net Worth
Offer") to acquire on a pro rata basis on the date (the "Net Worth Repurchase
Date") that is 45 days following the date of the Net Worth Notice (as defined
below), Notes in an aggregate principal amount equal to 10% of the original
outstanding principal amount of the Notes (or if less than 10% of the original
aggregate principal amount of the Notes issued are then outstanding, all the
Notes outstanding at the time) (the "Net Worth Offer Amount") at a purchase
price of 100% of the principal amount thereof, plus accrued interest to the Net
Worth Repurchase Date (the "Net Worth Price"). The Company may credit against
the Net Worth Offer Amount the principal amount of Notes acquired by the Company
prior to the Trigger Date through purchase, optional redemption or exchange. The
Company, however, may not credit a specific Note in more than one Net Worth
Offer. In no event shall the failure to meet the Minimum Net Worth at the end of
any fiscal quarter be counted toward the making of more than one Net Worth
Offer. The Company shall notify the Trustee promptly after the occurrence of any
of the events specified in this provision and shall notify the Trustee in
writing if its Net Worth is equal to or less than the Minimum Net Worth for any
fiscal quarter.
Within 30 days after the Trigger Date, the Company, or, at the request
of the Company, the Trustee, shall give notice of the Net Worth Offer to each
holder (the "Net Worth Notice"). To accept a Net Worth Offer a holder shall
deliver to the Company (or to a Paying Agent designated by the Company for such
purpose), on or before the 30th day after the date of the Net Worth Notice, a
written notice of the holder's acceptance of such offer, together with the Notes
with respect to which the offer is being accepted, duly endorsed for transfer to
the Company. Such written notice may be withdrawn upon further written notice
delivered to the Trustee on or prior to the third day preceding the Net Worth
Repurchase Date.
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If the Net Worth Repurchase Date is between a regular record date for
the payment of interest and the next succeeding interest payment date, any Note
to be repurchased must be accompanied by funds equal to the interest payable on
such succeeding interest payment date on the principal amount to be repurchased
(unless such Note shall have been called for redemption, in which case no such
payment shall be required), and the interest on the principal amount of the Note
being repurchased will be paid on such next succeeding interest payment date to
the registered holder of such Note on the immediately preceding record date. A
Note repurchased on an interest payment date need not be accompanied by any
payment, and the interest on the principal amount of the Note being repurchased
will be paid on such interest payment date to the registered holder of such Note
on the immediately preceding record date.
If any repurchase pursuant to the foregoing provisions constitutes a
tender offer as defined under the Exchange Act, the Company will comply with the
requirements of Rule l4e-1 and any other tender offer rules under the Exchange
Act which then may be applicable.
LIMITATION ON DEBT.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee or
otherwise become liable for ("Incur") any Debt, except Permitted Debt.
"Permitted Debt" means (a) Debt evidenced by the Existing Notes, the Existing
Guarantees, the Offered Notes, the Guarantees of the Offered Notes, and any
Exchange Notes issued in exchange for any of the foregoing including the related
Guarantees, (b) Debt Incurred by the Company or any Guarantor under or in
respect of a Bank Facility (including any guarantees related thereto) for
working capital or other corporate purposes or evidenced by letters of credit;
provided that the aggregate amount of all such Debt outstanding at any time
pursuant to this clause (b) may not exceed $140,000,000, (c) Debt Incurred under
a Warehouse Facility; provided that the amount of such Debt (including funding
drafts issued thereunder) outstanding at any time pursuant to this clause (c)
guaranteed by the Company or a Restricted Subsidiary may not exceed the value of
the Mortgages pledged to secure Debt thereunder, (d) Debt of the Company to any
Guarantor or of any Restricted Subsidiary of the Company to the Company or to
any Guarantor, (e) Existing Debt (without duplication of Debt indicated under
clauses (a)-(d) above) of the Company and its Restricted Subsidiaries other than
Debt to be repaid from the proceeds of the sale of the Notes, (f) Non-Recourse
Debt, (g) Debt in respect of performance, completion, guarantee, surety and
similar bonds or banker's acceptances provided by the Company or any of its
Restricted Subsidiaries in the ordinary course of business, (h) additional Debt
of the Company or any Guarantor in an amount not to exceed $7,500,000 at any
time outstanding, (i) Debt referred to in the definition of Interest Rate
Protection Agreement, (j) Purchase Money Obligations incurred in the ordinary
course of business in an amount not exceeding $5,000,000 at any time
outstanding, and (k) Refinancing Debt.
Notwithstanding the foregoing, and subject to the immediately
succeeding paragraph, the Company and the Guarantors may Incur Debt if, at the
time such Debt is so Incurred and after giving effect thereto and the
application of the proceeds therefrom, the Company's Coverage Ratio shall not be
less than 2.0 to 1.0.
The Company shall not, and the Company will not cause or permit any
Guarantor to, directly or indirectly, Incur any Debt that purports to be by its
terms (or by the terms of any agreement governing such Debt) subordinated to any
other Debt of the Company or of such Guarantor, as the case may be, unless such
Debt is also by its terms (or by the terms of any agreement governing such Debt)
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 Debt is
subordinated to such other Debt.
LIMITATION ON RESTRICTED PAYMENTS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment, if, after
giving effect thereto (a) an Event of Default, or an event that through the
passage of time or the giving of notice, or both, would become an Event of
Default, shall have occurred and be continuing, or (b) the Company would be
unable to incur $1.00 of additional Debt under the second paragraph set forth
under the caption "Limitation on Debt," or (c) the aggregate amount of all
Restricted Payments made by the Company and its Restricted Subsidiaries (the
amount expended or distributed for such purposes, if other than cash, to be
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determined in good faith by the board of directors of the Company) from and
after February 2, 1998 shall exceed the sum of (i) the aggregate of 50% of the
Consolidated Net Income of the Company accrued for the period (taken as one
accounting period) commencing with February 1, 1998 to and including the first
full month ended immediately prior to the date of such calculation (or, in the
event Consolidated Net Income is a deficit, then minus 100% of such deficit),
(ii) the aggregate net proceeds (the amount of such proceeds, if other than
cash, to be determined in good faith by the board of directors of the Company)
received by the Company from the issuance or sale (other than to a Subsidiary of
the Company) of its capital stock (other than Redeemable Stock), including the
principal amount of any of the Convertible Notes outstanding on February 2, 1998
and any other convertible or exchangeable notes issued after February 2, 1998 or
other convertible or exchangeable securities issued after February 2, 1998, in
any such case to the extent such principal amount is converted or exchanged into
capital stock from and after February 2, 1998, and options, warrants and rights
to purchase its capital stock (other than Redeemable Stock); PROVIDED that the
net proceeds received by the Company from the Equity Offering shall be excluded
from this clause (ii), (iii) in the case of the disposition or repayment of any
Investment constituting a Restricted Payment made after February 2, 1998
(excluding any Investment described in clause (4) of the following paragraph,
but including upon the redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary), an amount equal to the lesser of the return of capital
with respect to such Investment and the cost of such Investment, in either case,
reduced (but not below zero) by the excess, if any, of the cost of the
disposition of such Investment over the gain, if any, realized by the Company or
such Restricted Subsidiary in respect of such disposition of such Investment and
(iv) $5,000,000.
The foregoing paragraph will not prevent: (1) the payment of any
dividend within 60 days after the date of its declaration if such dividend could
have been made on the date of its declaration in compliance with the foregoing
provisions; (2) so long as no Default or Event of Default shall have occurred
and be continuing, the redemption, repurchase or other acquisition or retirement
of any shares of any class of capital stock of the Company or any Subsidiary of
the Company in exchange for, or out of the net cash proceeds of, a substantially
concurrent (x) capital contribution to the Company from any Person (other than a
Subsidiary of the Company) or (y) issue and sale of other shares of capital
stock (other than Redeemable Stock) of the Company to any Person (other than to
a Subsidiary of the Company); provided, however, that the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase or other
acquisition or retirement shall be excluded from clause (ii) of the preceding
paragraph; (3) so long as no Default or Event of Default shall have occurred and
be continuing, any redemption, repurchase or other acquisition or retirement of
subordinated Debt by exchange for, or out of the net cash proceeds of, a
substantially concurrent (x) capital contribution to the Company from any Person
(other than a Subsidiary of the Company) or (y) issue and sale of (A) capital
stock (other than Redeemable Stock) of the Company to any Person (other than to
a Subsidiary of the Company); provided, however, that the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase or other
acquisition or retirement shall be excluded from clause (ii) of the preceding
paragraph; or (B) Debt of the Company issued to any Person (other than a
Subsidiary of the Company), so long as such Debt (x) has no stated maturity
earlier than February 1, 2008, (y) has a Weighted Average Life to Maturity equal
to or greater than the remaining Weighted Average Life to Maturity of the Notes
and (z) is subordinated to the Notes in the same manner and at least to the same
extent as the subordinated Debt so purchased, exchanged, redeemed, acquired or
retired; (4) Investments constituting Restricted Payments made as a result of
the receipt of non-cash consideration from any Asset Sale made pursuant to and
in compliance with the covenant described under "Limitation on Asset Sales"; (5)
so long as no Default or Event of Default has occurred and is continuing, the
repurchase or redemption of shares of capital stock from any officer, director
or employee of the Company or its Restricted Subsidiaries whose employment has
been terminated or who has died or become disabled in an aggregate amount not to
exceed $250,000 per annum; (6) so long as no Default or Event of Default shall
have occurred and be continuing, the making of Restricted Payments in an
aggregate amount not to exceed $5,000,000 and (7) the redemption of the
Convertible Notes, provided that amounts paid pursuant to clauses (1), (5) and
(6) (but not clauses (2), (3), (4) or (7)) shall reduce amounts available for
future Restricted Payments under the preceding paragraph.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, assume or otherwise cause or
suffer to exist or to become effective any consensual encumbrance or restriction
on the ability of any Restricted Subsidiary of the Company to (a) pay dividends
or make any other
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distributions on its capital stock to the Company or any of its Restricted
Subsidiaries; (b) make payments in respect of any Debt owed to the Company or
any of its Restricted Subsidiaries; or (c) make loans or advances to the Company
or any of the Company's Restricted Subsidiaries; provided, however, that the
following restrictions shall not be prohibited pursuant to this provision: (i)
those contained in the Indenture, the Existing Indenture, a Bank Facility, a
Warehouse Facility and Refinancing Debt (to the extent restrictions contained in
such Refinancing Debt are not more restrictive than those contained in the Debt
being refinanced); (ii) consensual encumbrances or restrictions binding upon any
person at the time such Person becomes a Subsidiary of the Company; provided
that such encumbrances or restrictions are not created, incurred or assumed in
contemplation of such Person becoming a Subsidiary of the Company and do not
extend to any other property of the Company or another of its Subsidiaries;
(iii) restrictions contained in security agreements permitted by the Indenture
securing Debt permitted by the Indenture to the extent such restrictions
restrict the transfer of assets subject to such security agreements; (iv) any
encumbrance or restriction consisting of customary non-assignment provisions in
leases to the extent such provisions restrict the transfer of the leases; (v)
any encumbrance or restriction pursuant to an agreement in effect on February 2,
1998; or (vi) any restrictions with respect to a Subsidiary of the Company
imposed pursuant to an agreement which has been entered into for the sale or
disposition of all or substantially all the capital stock or assets of such
Subsidiary.
LIMITATION ON LIENS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien upon or with respect to any of the assets of the Company or any
such Subsidiary, whether now owned or hereafter acquired, or on any income or
profits therefrom, other than Liens which constitute Permitted Liens at the date
such Liens are created, unless contemporaneously therewith or prior thereto all
payments due under the 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. The Indenture will
also provide that no Liens will be permitted to be created or suffered to exist
on any Debt from the Company in favor of any Restricted Subsidiary.
TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into any transactions with
Affiliates of the Company unless (i) such transactions are between or among the
Company and its Restricted Subsidiaries, (ii) such transactions are in the
ordinary course of business and consistent with past practice or (iii) the terms
of such transactions are fair and reasonable to the Company or such Restricted
Subsidiary, as the case may be, and 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 between
unaffiliated parties. In the event of any transaction or series of transactions
occurring subsequent to February 2, 1998 with an Affiliate of the Company which
involves in excess of $1,000,000 and is not permitted under clause (i) of the
preceding sentence, all of the disinterested members of the Board of Directors
shall by resolution determine that such transaction or series of transactions
meets the criteria set forth in clause (iii) of the preceding sentence. In the
event of any transaction or series of transactions occurring subsequent to
February 2, 1998 with an Affiliate of the Company which involves in excess of
$10,000,000 and is not permitted under clause (i) above, the Company will be
required to deliver to the Trustee an opinion of an Independent Financial
Advisor to the effect that the transaction is fair to the Company or the
relevant Restricted Subsidiary, as the case may be, from a financial point of
view. Notwithstanding the foregoing, such provisions do not prohibit and will
not apply to (1) any Restricted Payment which is permitted by the "Limitation on
Restricted Payments" covenant or (2) the payment of compensation to directors of
the Company who are not employees of the Company and wages and other
compensation to officers of the Company or any of its Subsidiaries.
LIMITATION ON ASSET SALES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly consummate an Asset Sale, unless (i) the
Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by the board of directors of the Company or
the Restricted Subsidiary, as the case may be) of the assets disposed of,
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and (ii) the consideration for such Asset Sale consists of at least 85% cash;
provided that (x) the amount of liabilities assumed by the transferee, (y) any
notes or other obligations received by the Company or such Restricted Subsidiary
and immediately converted into cash or (z) with respect to the sale or other
disposition of all of the capital stock of any Restricted Subsidiary, the amount
of liabilities that remain the obligation of such Restricted Subsidiary
subsequent to such sale or other disposition, shall be deemed to be "cash."
Within 12 months from the date that any Asset Sale is consummated, the
Net Proceeds thereof will be reinvested in Additional Assets or applied to the
redemption or repurchase of Debt of the Company which ranks pari passu with the
Notes or Debt of a Restricted Subsidiary of the Company which is not
subordinated to other debt of such Restricted Subsidiary (which, in each case,
will be a permanent reduction of such Debt). To the extent that the Net Proceeds
of an Asset Sale are not so applied, the Company or such Restricted Subsidiary,
as the case may be, will, within 30 days from the expiration of such 12-month
period, use the remaining Net Proceeds (less any amounts used to pay reasonable
fees and expenses connected with a Net Proceeds Offer) to make an offer to
repurchase the Notes at a price equal to 100% of the principal amount thereof,
plus accrued interest to the Net Proceeds Repurchase Date ("a Net Proceeds
Offer").
Notwithstanding the foregoing, the Net Proceeds of an Asset Sale are
not required to be applied in accordance with the preceding paragraph, unless
and until the aggregate Net Proceeds for all such Asset Sales in a 12-month
period exceeds $5,000,000.
To accept a Net Proceeds Offer a holder shall deliver to the Company
(or to a Paying Agent designated by the Company for such purpose) on or before
the 30th day after the date of the Net Proceeds Offer (the "Net Proceeds
Repurchase Date"), a written notice of the holder's acceptance of the Net
Proceeds Offer, together with the Notes with respect to which the offer is being
accepted, duly endorsed for transfer to the Company. Such written notice may be
withdrawn upon further written notice to the Trustee on or prior to the third
day preceding the Net Proceeds Repurchase Date.
If the Net Proceeds Repurchase Date is between a regular record date
for the payment of interest and the next succeeding interest payment date, any
Note to be repurchased must be accompanied by funds equal to the interest
payable on such succeeding interest payment date on the principal amount to be
repurchased (unless such Note shall have been called for redemption, in which
case no such payment shall be required), and the interest on the principal
amount of the Note being repurchased will be paid on such next succeeding
interest payment date to the registered holder of such Note on the immediately
preceding record date. A Note repurchased on an interest payment date need not
be accompanied by any payment, and the interest on the principal amount of the
Note being repurchased will be paid on such interest payment date to the
registered holder of such Note on the immediately preceding record date.
If any repurchase pursuant to the foregoing provisions constitutes a
tender offer as defined under the Exchange Act, the Company will comply with the
requirements of Rule l4e-1 and any other tender offer rules under the Exchange
Act which then may be applicable.
Any amount of Net Proceeds remaining after a Net Proceeds Offer
shall be returned by the Trustee to the Company and may be used by the Company
for any purpose not inconsistent with the Indenture.
CERTAIN DEFINITIONS
In addition to the terms defined above, the Indenture contains, among
other things, the following definitions:
"ADDITIONAL ASSETS" means assets used or usable by the Company or any
of its Restricted Subsidiaries in the operation of the existing lines of
business of the Company and its Restricted Subsidiaries.
"AFFILIATE" of any Person means (i) any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person and (ii) any other Person that beneficially owns at
least 10% of the voting common stock of such Person. For the purposes of this
definition, "control" when used with
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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.
"ASSET SALE" for any Person means the sale, lease, conveyance or other
disposition (including, without limitation, by merger, consolidation or sale and
leaseback transaction, and whether by operation of law or otherwise) of any of
that Person's assets (including, without limitation, the sale or other
disposition of capital stock of any Subsidiary of such Person, whether by such
Person or such Subsidiary) outside the ordinary course of business, whether
owned on February 2, 1998, or subsequently acquired in one transaction or a
series of related transactions, in which such Person and/or its Subsidiaries
receive cash and/or other consideration (including, without limitation, the
unconditional assumption of Indebtedness of such Person and/or its Subsidiaries)
of $2,500,000 or more as to each such transaction or series of related
transactions; provided, however, that (i) a transaction or series of related
transactions that results in a Change of Control shall not constitute an Asset
Sale, (ii) sales, leases, conveyances or other dispositions of real estate
related to the homebuilding business of the Company or its Subsidiaries will not
constitute Asset Sales, and (iii) transactions between the Company and any
Guarantor, or among such Guarantors will not constitute Asset Sales.
"BANK FACILITY" means, collectively, one or more commitments from one
or more banks or other lending institutions to lend funds, together with any and
all agreements, documents and instruments from time to time delivered in
connection therewith as such commitments or any such agreements, documents or
instruments may be in effect or amended, amended and restated, renewed,
extended, restructured, supplemented or otherwise modified from time to time and
any credit agreement, loan agreement, note purchase agreement, indenture or
other agreement, document or instrument refinancing, refunding or otherwise
replacing such Bank Facility, whether or not with the same agent, trustee,
representative lenders or holders, and, subject to the proviso to the next
succeeding sentence, irrespective of any changes in the terms and conditions
thereof. Without limiting the generality of the foregoing, the term "Bank
Facility" shall include any amendment, amendment and restatement, renewal,
extension, restructuring, supplement or modification to any Bank Facility and
all refundings, refinancings and replacements of any Bank Facility, including
any agreement (i) extending the maturity of any Debt incurred thereunder or
contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder; provided that such borrowers and issuers include one or more of the
Company and its Subsidiaries and their respective successors and assigns, (iii)
increasing the amount of Debt Incurred thereunder or available to be borrowed
thereunder; provided that on the date thereof such Debt would not be prohibited
by clause (b) of the definition of Permitted Debt set forth under the
"Limitation on Debt" covenant, or (iv) otherwise altering the terms and
conditions thereof in a manner not prohibited by the terms of the Indenture.
"COMMON STOCK" means the common stock, par value $.01 per share, of the
Company.
"CONSOLIDATED INTEREST EXPENSE" of the Company means, for any period,
the aggregate amount of interest which, in accordance with generally accepted
accounting principles, would be included on an income statement for the Company
and its Restricted Subsidiaries on a consolidated basis, whether expensed
directly, or included as a component of cost of goods sold, or allocated to
joint ventures or otherwise (including, but not limited to, imputed interest
included on 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 associated with hedging obligations, 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 non-cash
interest expense), excluding interest expense related to mortgage banking
operations, plus the product of (x) the sum of (i) cash dividends paid on any
Preferred Stock of the Company plus (ii) cash dividends, the principal amount of
any debt securities issued as a dividend, the liquidation value of any Preferred
Stock issued as a dividend and the fair market value (as determined by the
Company's board of directors in good faith) of any other non-cash dividends, in
each case, paid on any Preferred Stock of any Restricted Subsidiary of Company
(other than a Wholly-Owned Restricted Subsidiary), times (y) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current effective aggregate federal, state and local tax rate of the Company,
expressed as a decimal.
"CONSOLIDATED INTEREST INCURRED" of the Company means, for any period,
(a) the aggregate amount of interest which, in accordance with generally
accepted accounting principles, would be included on an income
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statement for the Company and its Restricted Subsidiaries on a consolidated
basis, whether expensed directly, or included as a component of cost of goods
sold, or allocated to joint ventures or otherwise (including, but not limited
to, imputed interest included on 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 associated with hedging
obligations, 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 non-cash interest expense), excluding interest expense
related to the Company's mortgage banking operations, plus or minus, without
duplication, (b) the difference between capitalized interest for such period and
the interest component of cost of goods sold for such period, plus (c) the
product of (x) the sum of (i) cash dividends paid on any Preferred Stock of the
Company plus (ii) cash dividends, the principal amount of any debt securities
issued as a dividend, the liquidation value of any Preferred Stock issued as a
dividend and the fair market value (as determined by the Company's Board of
Directors in good faith) of any other non-cash dividends, in each case, paid on
any Preferred Stock of any Subsidiary of the Company (other than a Wholly-Owned
Restricted Subsidiary), times (y) a fraction, the numerator of which is one and
the denominator of which is one minus the then current effective aggregate
federal, state and local tax rate of the Company, expressed as a decimal.
"CONSOLIDATED NET INCOME" of the Company, for any period, means the net
income (loss) of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis, in accordance with generally accepted
accounting principles; provided that, without duplication, (i) the net income of
any Person, other than a Restricted Subsidiary which is consolidated with the
Company, in which any Person other than the Company and its Restricted
Subsidiaries has an interest shall be included only to the extent of the amount
of cash dividends or distributions actually paid to the Company or a Restricted
Subsidiary during such period, (ii) the net income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iii) the net income of any Subsidiary of the
Company shall be excluded to the extent such Subsidiary is prohibited, directly
or indirectly, from distributing such net income or any portion thereof to the
Company or a Restricted Subsidiary, (iv) all extraordinary gains and losses
(after taxes) that would be included on an income statement for such period
shall be excluded and (v) all gains and losses (after taxes) attributable to
Asset Sales shall be excluded; provided, that there shall be included in such
net income, without duplication, the net income of any Unrestricted Subsidiary
to the extent such net income is actually received by the Company or any of its
Restricted Subsidiaries in cash during such period.
"CONSOLIDATED NON-CASH CHARGES" of the Company means, for any period,
the aggregate depreciation, amortization and other non-cash charges (other than
reserves or expenses established in anticipation of future cash requirements
such as reserves for taxes and uncollectible accounts) of the Company and its
Restricted Subsidiaries on a consolidated basis for such period, as determined
in accordance with generally accepted accounting principles; provided that
Consolidated Non-cash Charges shall exclude (i) any charges that are not
included for the purpose of determining Consolidated Net Income, (ii) any
charges that are included for the purpose of determining Consolidated Interest
Expense or Consolidated Tax Expense and (iii) any charges representing
capitalized selling, general and administrative expenses that are expensed
during such period as cost of goods sold.
"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 and less the assets securing the payment of Non-Recourse
Debt of the Company and its Restricted Subsidiaries) on a consolidated basis at
the end of the fiscal quarter immediately preceding such date, as determined in
accordance with generally accepted accounting principles, less: (i) unamortized
debt and debt issuance expense, deferred charges, goodwill, patents, trademarks,
copyrights, and all other items which would be treated as intangibles on the
consolidated balance sheet of the Company and its Restricted Subsidiaries
prepared in accordance with generally accepted accounting principles and (ii)
appropriate adjustments on account of minority interests of other Persons
holding equity investments in Restricted Subsidiaries, in the case of each of
clauses (i) and (ii) above, as reflected on the consolidated balance sheet of
the Company and its Restricted Subsidiaries.
"CONSOLIDATED TANGIBLE NET WORTH" of the Company means the Company's
Net Worth less unamortized debt and debt issuance expense, deferred charges,
goodwill, patents, trademarks, copyrights, and all other items
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which would be treated as intangibles on the consolidated balance sheet of the
Company and its Restricted Subsidiaries prepared in accordance with generally
accepted accounting principles.
"CONSOLIDATED TAX EXPENSE" of the Company means, for any period, the
aggregate of the tax expense of the Company and its Restricted Subsidiaries for
such period, determined on a consolidated basis, in accordance with generally
accepted accounting principles.
"CONVERTIBLE NOTES" means up to $15,000,000 principal amount of the
Company's 7% Convertible Subordinated Notes due March 1, 2003.
"COVERAGE RATIO" of the Company means the ratio of the Company's EBITDA
to its Consolidated Interest Incurred for the four fiscal quarters ending
immediately prior to the date of determination. Notwithstanding clause (ii) of
the definition of Consolidated Net Income, if the Debt which is being Incurred
is Incurred in connection with an acquisition by the Company or a Restricted
Subsidiary, the Coverage Ratio shall be determined after giving effect to both
the Consolidated Interest Incurred related to the Incurrence of such Debt and
the EBITDA (x) of the Person becoming a Restricted Subsidiary of the Company or
(y) in the case of an acquisition of assets that constitute substantially all of
an operating unit or business, relating to the assets being acquired by the
Company or a Restricted Subsidiary of the Company.
"DEBT" means, as to any Person, without duplication, (a) any
indebtedness of such Person for borrowed money, (b) all indebtedness of such
Person evidenced by bonds, debentures, notes, letters of credit, drafts or
similar instruments, (c) all indebtedness of such Person to pay the deferred
purchase price of property or services, but not including accounts payable and
accrued expenses arising in the ordinary course of business, (d) all capitalized
lease obligations of such Person, (e) all Debt of others secured by a Lien on
any asset of such Person, whether or not such Debt is assumed by such Person or
guaranteed by such Person, (f) Redeemable Stock of such Person and Preferred
Stock of any Subsidiary of such Person, (g) all obligations of such Person with
respect to Interest Rate Protection Agreements and (h) all Debt of others
guaranteed by such Person. The amount of Debt of any Person at any date pursuant
to clauses (a)-(d) and (f) above shall be as would appear as a liability upon a
balance sheet of such Person prepared on a consolidated basis in accordance with
generally accepted accounting principles. Notwithstanding the foregoing, "Debt"
of the Company shall not include the amount reflected on a consolidated balance
sheet of the Company with respect to options to acquire real property which was
purchased by the Company and sold to a third party within 360 days of such
purchase for consideration at least equal to the amount paid by the Company for
such property less an amount equal to the value of such option.
"EBITDA" for the Company, for any period, means, without duplication,
the Consolidated Net Income of the Company plus, to the extent deducted in
calculating Consolidated Net Income, the sum of (a) Consolidated Tax Expense,
(b) Consolidated Interest Expense and (c) Consolidated Non-cash Charges.
"EXISTING DEBT" means all of the Debt of the Company and its Restricted
Subsidiaries that was outstanding on February 2, 1998.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt of such other Person (whether by agreement to keepwell or to maintain
financial condition or otherwise), provided that the term "guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business.
"HOMEBUILDING JOINT VENTURE" means (i) any Unrestricted Subsidiary and
(ii) any person which is not a Guarantor in which the Company or any of its
Subsidiaries has an ownership interest and in which no other person has a
greater beneficial ownership interest than the beneficial ownership interest of
the Company that, in each case, was formed for and is engaged in homebuilding
operations.
"INDEPENDENT FINANCIAL ADVISOR" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the
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judgment of the Board of Directors of the Company, is otherwise independent and
qualified to perform the task for which it is to be engaged.
"INTEREST RATE PROTECTION AGREEMENT" means any arrangement with any
other Person whereby, directly or indirectly, such Person is entitled to receive
from time to time periodic payments calculated by applying either a floating or
a fixed rate of interest on a stated notional amount in exchange for periodic
payments made by such Person calculated by applying a fixed or a floating rate
of interest on the same notional amount and shall include, without limitation,
interest rate swaps, caps, floors, collars and similar agreements; PROVIDED that
any arrangement which is entered into by the Company or any of its Restricted
Subsidiaries in connection with Debt Incurred by the Company or any of its
Restricted Subsidiaries shall constitute Permitted Debt.
"INVESTMENT" means, with respect to any Person, any direct or indirect
loan or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such Person of any capital stock, bonds, notes, debentures or other securities
or evidences of Debt issued by, any other Person. "Investments" shall exclude
extensions of trade credit by the Company and its Subsidiaries in the ordinary
course of business in accordance with normal trade practices of the Company or
such Subsidiary, as the case may be.
"ISSUE DATE" means the original date of issuance of the Notes.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
assignment (including any assignment of rights to receive payments of money
other than in connection with mortgage banking operations in the ordinary course
of business), charge, security interest or encumbrance of any kind (including
any conditional sale or other title retention agreement or any lease in the
nature thereof) in respect of such asset, any agreement to grant to any Person
any such Lien and any sale and leaseback of any asset.
"MATERIAL SUBSIDIARY" means any Restricted Subsidiary of the Company
which accounted for 10 percent or more of the Consolidated Tangible Assets or
EBITDA of the Company for the fiscal year ending immediately prior to any
Default or Event of Default.
"MORTGAGE" means a first priority mortgage or first priority deed of
trust on improved real property.
"NET PROCEEDS" with respect to any Asset Sale means (i) cash (in U.S.
dollars or freely convertible into U.S. dollars) received by the Company or any
of its Restricted Subsidiaries from such Asset Sale (including cash received as
consideration for the assumption or incurrence of liabilities incurred in
connection with or in anticipation of such Asset Sale), after (a) provision for
all income or other taxes measured by or resulting from such Asset Sale to the
Company or any of its Restricted Subsidiaries, whether or not offset by net
operating loss and tax credit carry-forwards, (b) payment of all brokerage
commissions and the underwriting fees and, without limitation, all other fees
and expenses related to such Asset Sale, and (c) deduction of appropriate
amounts to be provided by the Company or any of its Restricted Subsidiaries as a
reserve, in accordance with generally accepted accounting principles, against
any liabilities associated with the assets sold or otherwise disposed of in such
Asset Sale (including, without limitation, pension and other post-employment
benefit liabilities and liabilities related to environmental matters) or against
any indemnification obligations associated with the sale or other disposition of
the assets sold or otherwise disposed of in such Asset Sale, and (ii) all
noncash consideration received by the Company or any of its Restricted
Subsidiaries from such Asset Sale upon the liquidation or conversion of such
consideration into cash.
"NET WORTH" of the Company means, at any date, the aggregate of
capital, surplus and retained earnings of the Company and its Restricted
Subsidiaries as would be shown on a consolidated balance sheet of the Company
prepared in accordance with generally accepted accounting principles, adjusted
to exclude (to the extent included) investments by the Company and its
Subsidiaries in joint ventures and the amount of equity attributable to
Affiliates other than Restricted Subsidiaries of such Person.
"NON-RECOURSE DEBT" with respect to any Person means Debt of such
Person for which the sole legal recourse for collection of principal and
interest on such Debt is against the specific property identified in the
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instruments evidencing or securing such Debt and such property was acquired with
the proceeds of such Debt or such Debt was Incurred within 90 days after the
acquisition of such property.
"PERMITTED INVESTMENTS" of any Person means Investments of such Person
in (i) direct obligations of the United States or any agency thereof or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within 180 days of the date of acquisition thereof, (ii) certificates
of deposit maturing within 180 days of the date of acquisition thereof issued by
a bank, trust company or savings and loan association which is organized under
the laws of the United States or any state thereof having capital, surplus and
undivided profits aggregating in excess of $250 million and a Keefe Bank Watch
Rating of C or better, (iii) certificates of deposit maturing within 180 days of
the date of acquisition thereof issued by a bank, trust company or savings and
loan association organized under the laws of the United States or any state
thereof other than banks, trust companies or savings and loan associations
satisfying the criteria in (ii) above; provided that the aggregate amount of all
certificates of deposit issued to the Company at any one time by any one such
bank, trust company or savings and loan association will not exceed $100,000,
(iv) commercial paper given the highest rating by two established national
credit rating agencies and maturing not more than 180 days from the date of the
acquisition thereof, (v) repurchase agreements or money-market accounts which
are fully secured by direct obligations of the United States or any agency
thereof and (vi) in the case of the Company and its Subsidiaries, (1) any
receivables or loans taken by the Company or a Subsidiary in connection with the
sale of any asset otherwise permitted by the Indenture, (2) Investments in any
Guarantor, (3) Investments in the Notes or Debt PARI PASSU with the Notes, (4)
Investments in evidences of Debt, securities or other property received from
another Person by the Company or any of its Restricted Subsidiaries in
connection with any bankruptcy proceeding or by reason of a composition or
readjustment of debt or a reorganization of such Person or as a result of
foreclosure, perfection or enforcement of any Lien in exchange for evidences of
Debt, securities or other property of such Person held by the Company or any of
its Restricted Subsidiaries, or for other liabilities or obligations of such
other Person to the Company or any of its Restricted Subsidiaries that were
created, in accordance with the terms of the Indenture, (5) Investments in
Interest Rate Protection Agreements which constitute Permitted Debt, (6)
Investments in any Homebuilding Joint Ventures not in excess of $20 million in
the aggregate for all Homebuilding Joint Ventures and (7) Investments in an
aggregate amount outstanding not greater than $5,000,000.
"PERMITTED LIENS" with respect to the Company and its Restricted
Subsidiaries means (i) (x) until such time as the Company shall have less than
an aggregate of $40,000,000 of maximum availability under one or more Bank
Facilities described in clause (b) of the "Limitation on Debt" covenant which
are secured by any Liens, Liens securing the Company's Bank Facility or Bank
Facilities described in clause (b) of the "Limitation on Debt" covenant, and (y)
from and after the first time at which the Company shall have less than an
aggregate of $40,000,000 of maximum availability under one or more Bank
Facilities which are secured by Liens, Liens on assets of the Company or any
Restricted Subsidiary of the Company securing Debt which may be incurred
pursuant to the "Limitation on Debt" covenant, provided that the aggregate
amount of Debt secured by Liens (excluding Nonrecourse Debt of the Company and
Restricted Subsidiaries and Debt outstanding under the Warehouse Facility) may
not exceed 40 percent of the Company's Consolidated Tangible Assets; (ii) Liens
securing a Warehouse Facility; provided that such Liens shall not extend to any
assets other than the mortgages, promissory notes and other collateral that
secures mortgage loans made by the Company or any of its Restricted
Subsidiaries; (iii) Liens securing Non-Recourse Debt of the Company or any
Restricted Subsidiary of the Company, provided that such Liens apply only to the
property financed out of the net proceeds of such Non-Recourse Debt within 90
days of the incurrence of such Non-Recourse Debt; (iv) Liens securing Debt of a
Person existing at the time that such Person is merged into or consolidated with
the Company or a Restricted Subsidiary; provided that such Liens were not
created in contemplation of such merger or consolidation and do not extend to
any assets or property of the Company or any Restricted Subsidiary, other than
the surviving Person and its Subsidiaries; (v) Liens on assets or property
acquired by the Company or a Restricted Subsidiary; provided that such Liens
were not created in contemplation of such acquisition and do not extend to any
other assets or property (other than proceeds of such acquired assets or
property); (vi) Liens in respect of Interest Rate Protection Agreements which
constitute Permitted Debt; (vii) Liens for taxes, assessments or governmental
charges or claims that either (a) are not yet delinquent or (b) are being
contested in good faith by appropriate proceedings and as to which appropriate
reserves have been established or other provisions have been made in accordance
with generally accepted accounting principles; (viii) statutory Liens of
landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's, contractors' or other Liens imposed by law and arising in the
ordinary course of business; (ix) Liens (other than any Lien imposed
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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; (x)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds, progress payments,
government contracts and other obligations of like nature (exclusive of
obligations for the payment of borrowed money), in each case, incurred in the
ordinary course of business; (xi) attachment or judgment Liens not giving rise
to a Default or Event of Default; (xii) easements, rights-of-way, restrictions
and other similar charges or encumbrances not materially interfering with the
ordinary conduct of the business of the Company or any of its Subsidiaries;
(xiii) leases or subleases granted to others not materially interfering with the
ordinary conduct of the business of the Company or any of its Restricted
Subsidiaries; (xiv) Liens securing Refinancing Debt; provided that such Liens
only extend to the assets securing the Debt being refinanced, such refinanced
Debt was previously secured and such Liens do not extend to any other assets of
the Company or the assets of any of the Company's other Subsidiaries; (xv) Liens
securing Purchase Money Obligations (including capitalized lease obligations);
(xvi) Liens existing on February 2, 1998; (xvii) any contract to sell an asset
provided such sale is otherwise permitted under the Indenture; and (xviii) Liens
on property or assets of any Restricted Subsidiary securing Debt of such
Restricted Subsidiary owing to the Company or one or more Restricted
Subsidiaries of the Company.
"PERSON" means any individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or agency or instrumentality thereof.
"PREFERRED STOCK" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's preferred or preference stock whether outstanding on or issued
after February 2, 1998, and including, without limitation, all classes and
series of preferred or preference stock.
"PURCHASE MONEY OBLIGATIONS" means Debt of any Person secured by Liens
(i) on property purchased, acquired, or constructed by such Person or its
Subsidiaries after February 2, 1998 and used in the ordinary course of business
by such Person and (ii) securing the payment of all or any part of the purchase
price or construction cost of such assets and limited to the property so
acquired and improvements thereof; provided that such Debt is incurred no later
than 90 days after the acquisition of such property or completion of such
construction or improvements.
"REDEEMABLE STOCK" means, with respect to any Person, any class or
series of capital stock of such Person that is redeemable at the option of the
holder (except pursuant to a change in control provision that does not (i) cause
such capital stock to become redeemable in circumstances which would not
constitute a Change of Control and (ii) require the Company to pay the
redemption price therefor prior to the Change of Control Repurchase Date) or is
subject to mandatory redemption or otherwise matures prior to the final stated
maturity of the Notes.
"REFINANCING DEBT" means Debt that refunds, refinances or extends any
Notes, Existing Notes, Existing Debt (other than Existing Debt to be repaid with
the net proceeds of the offering of the Notes) or other Debt incurred by the
Company or its Restricted Subsidiaries permitted under the terms of the
Indenture, but only to the extent that (i) the Refinancing Debt is subordinated
to the Notes to the same extent as the Debt being refunded, refinanced or
extended, if at all, (ii) the Refinancing Debt is scheduled to mature either (a)
no earlier than the Debt being refunded, refinanced or extended, or (b) after
the maturity date of the Notes, (iii) the portion, if any, of the Refinancing
Debt 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 Debt is
Incurred that is equal to or greater than the Weighted Average Life to Maturity
of the portion of the Debt being refunded, refinanced or extended that is
scheduled to mature on or prior to the maturity date of the Notes, and (iv) the
gross proceeds of such Refinancing Debt are an amount that is equal to or less
than the aggregate principal amount then outstanding under the Debt being
refunded, refinanced or extended (plus the premiums or other payments paid in
connection therewith (which shall not exceed the stated amount of any premium or
other payment required to be paid in connection with such a renewal, extension,
substitution, refunding, refinancing, redemption, repurchase or replacement
pursuant to the terms of the Debt being renewed, extended, substituted,
refunded, refinanced, amended, modified, supplemented, redeemed, repurchased or
replaced) and the expenses incurred in connection therewith).
"RESTRICTED PAYMENTS" means with respect to the Company or any
Restricted Subsidiary (i) the declaration or payment of any dividend or other
distribution on any shares of such Person's capital stock (except (x) dividends
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or distributions in additional shares of capital stock of the Company other than
Redeemable Stock or (y) the declaration or payment of any dividend or other
distribution by a Restricted Subsidiary to the Company or another Restricted
Subsidiary), (ii) any payment on account of the purchase, redemption or other
acquisition of (a) any shares of such Person's capital stock or (b) any option,
warrant or other right to acquire shares of such Person's capital stock, except,
in each case, capital stock held by the Company or a Restricted Subsidiary,
(iii) any Investment (other than a Permitted Investment) in any Person, or (iv)
any principal payment, redemption, repurchase, defeasance or other acquisition
or retirement, prior to scheduled principal payment or scheduled maturity, of
Debt of the Company or its Subsidiaries which is subordinated in right of
payment to the Notes (other than Debt held by the Company or a Restricted
Subsidiary).
"RESTRICTED SUBSIDIARY" means any Subsidiary which is not an
Unrestricted Subsidiary.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation or
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 by such Person or one or
more of the other Subsidiaries of that Person or (ii) any partnership or joint
venture at least a majority of the voting power of which is at the time directly
or indirectly owned by such Person or one or more of the other Subsidiaries of
that Person, or a combination thereof or a successor thereto.
"UNRESTRICTED SUBSIDIARY" means each of the Subsidiaries of the Company
(other than a Guarantor) so designated by a resolution adopted by the Board of
Directors of the Company as provided below; provided that (a) neither the
Company nor any of its other Subsidiaries (other than Unrestricted Subsidiaries)
(1) provides any direct or indirect credit support for any Debt of such
Subsidiary (including any undertaking, agreement or instrument evidencing such
Debt) or (2) is directly or indirectly liable for any Debt of such Subsidiary,
and (b) the creditors with respect to Debt for borrowed money of such Subsidiary
have agreed in writing that they have no recourse, direct or indirect, to the
Company or any other Subsidiary of the Company (other than Unrestricted
Subsidiaries), including, without limitation, recourse with respect to the
payment of principal or interest on any Debt of such Subsidiary. The Board of
Directors of the Company may designate an Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that (i) any such redesignation will be deemed
to be an Incurrence by the Company and its Restricted Subsidiaries of the Debt
(if any) of such redesignated Subsidiary for purposes of the "Limitation on
Debt" covenant set forth in the Indenture as of the date of such redesignation,
(ii) any Debt of such Unrestricted Subsidiary could then be Incurred in
accordance with the "Limitation on Debt" covenant set forth in the Indenture on
the date of such redesignation and (iii) the Liens of such Unrestricted
Subsidiary could then be incurred in accordance with the "Limitation on Liens"
covenant set forth in the Indenture as of the date of such redesignation.
Subject to the foregoing, the Board of Directors of the Company also may
designate any Restricted Subsidiary to be an Unrestricted Subsidiary; provided
that (i) all previous Investments by the Company and its Restricted Subsidiaries
in such Restricted Subsidiary (net of any returns previously paid on such
Investments) will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the "Limitations on Restricted Payments" covenant set forth in the Indenture,
(ii) the Company and its Restricted Subsidiaries could incur $1.00 of additional
Indebtedness under the Coverage Ratio test contained in the "Limitations on
Debt" covenant set forth in the Indenture and (iii) no Default or Event of
Default shall have occurred or be continuing. Any such designation or
redesignation by the Board of Directors of the Company 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 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.
"WAREHOUSE FACILITY" means a Bank Facility to finance the making of
mortgage loans originated by the Company or any of its Subsidiaries.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Debt or
portion thereof, if applicable, at any date, the number of years obtained by
dividing (i) the then outstanding principal amount of such Debt or portion
thereof, if applicable, into (ii) 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 payment at
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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.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means any Restricted Subsidiary of
the Company of which 100% of the outstanding capital stock is owned by one or
more Wholly Owned Restricted Subsidiaries of the Company or by the Company and
one or more Wholly Owned Restricted Subsidiaries of the Company. For purposes of
this definition, any directors' qualifying shares shall be disregarded in
determining the ownership of a Subsidiary.
EVENTS OF DEFAULT
The following shall constitute Events of Default with respect to the
Notes: (i) failure to pay the principal of any Note when such principal becomes
due and payable at maturity, upon acceleration or otherwise; (ii) failure to pay
interest on any Note when due, and such failure continues for a 30-day period;
(iii) a default in the observance or performance of any other covenant or
agreement of the Company or the Guarantors in the Note, the Guarantee or the
Indenture that continues for the period and after the notice specified below;
(iv) an event of default shall have occurred under one or more evidences of Debt
of the Company or any of its Restricted Subsidiaries (other than Non-Recourse
Debt) with an outstanding aggregate principal amount of $5,000,000 or more,
whether such Debt now exists or is created hereafter, which event of default (1)
consists of the failure by the Company or any Restricted Subsidiary to make any
payment in respect of such Debt at its final maturity or (2) results in the
acceleration of such Debt which acceleration shall be in effect; (v) any final
judgment or judgments for payment of money in excess of $5,000,000 in the
aggregate shall be rendered against the Company or any of its Restricted
Subsidiaries and shall remain unstayed, unsatisfied or undischarged for the
period and after the notice specified below; (vi) certain events of bankruptcy,
insolvency or reorganization of the Company or Material Subsidiaries; and (vii)
any Guarantee of a Material 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). The Company is required to deliver to the Trustee
within 120 days after the end of each fiscal year of the Company, an officer's
certificate stating whether or not the signatories know of any default by the
Company under the Indenture and the Notes and, if any default exists, describing
such default.
A default under clause (iii) or (v) above is not an Event of Default
until the Trustee or the holders of at least 25% in principal amount of the
Notes then outstanding notify the Company of the default and the Company does
not cure the default within 60 days. The notice must specify the default, demand
that it be remedied and state that the notice is a "Notice of Default." If the
holders of 25% in principal amount of Notes then outstanding request the Trustee
to give such notice on their behalf, the Trustee shall do so.
In case an Event of Default (other than an Event of Default resulting
from certain events of bankruptcy, insolvency or reorganization of the Company)
shall have occurred and be continuing, the Trustee, by notice to the Company, or
the holders of 25% of the principal amount of the Notes then outstanding, by
notice to the Company and the Trustee, may declare the principal of the Notes,
plus accrued interest, to be immediately due and payable. In case an Event of
Default resulting from certain events of bankruptcy, insolvency or
reorganization of the Company shall occur, such amounts shall be due and payable
without any declaration or any act on the part of the Trustee or the holders of
the Notes. Any declaration of acceleration may be rescinded and past defaults
may be waived by the holders of a majority of the principal amount of the Notes
then outstanding upon conditions provided in the Indenture. Except to enforce
the right to receive payment of principal or interest when due, no holder of a
Note may institute any proceeding with respect to the Indenture or for any
remedy thereunder unless such holder has previously given to the Trustee written
notice of a continuing Event of Default and unless the holders of 25% of the
principal amount of the Notes then outstanding have requested the Trustee to
institute proceedings in respect of such Event of Default and have offered the
Trustee reasonable indemnity against loss, liability and expense to be thereby
incurred, the Trustee has failed so to act for 60 days after receipt of the same
and during such 60-day period the holders of a majority of the principal amount
of the Notes then outstanding have not given the Trustee a direction
inconsistent with the request. Subject to certain restrictions, the holders of a
majority in principal amount of the Notes then outstanding will have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee. The Trustee,
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however, may refuse to follow any direction that conflicts with law or the
Indenture, that is unduly prejudicial to the rights of any holder of a Note or
that would involve the Trustee in personal liability and the Trustee may take
any other action deemed proper by the Trustee which is not inconsistent with
such direction.
MERGERS AND CONSOLIDATIONS
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 the Indenture (as an entirety or substantially as an entirety in one
transaction or series of related transactions), to any Person or permit any of
its Restricted Subsidiaries to do any of the foregoing (in each case other than
with the Company or another Wholly Owned Restricted Subsidiary) unless: (i) the
Person formed by or surviving such consolidation or merger (if other than the
Company or such Guarantor, as the case may be), or to which such sale, lease,
conveyance or other disposition or assignment will be made (collectively, the
"Successor"), is a corporation or other legal entity organized and existing
under the laws of the United States or any state thereof or the District of
Columbia, and the Successor assumes by supplemental indenture in a form
reasonably satisfactory to the Trustee all of the obligations of the Company or
such Guarantor, as the case may be, under the Notes or such Guarantor's
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
Tangible 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 Tangible Net Worth of the Company immediately prior to such
transaction and (iv) in the case of a transaction involving the Company,
immediately after giving effect to such transaction and the use of any net
proceeds therefrom, on a pro forma basis, the Coverage Ratio of the Company or
the Successor (in the case of a transaction involving the Company), as the case
may be, would be such that the Company or the Successor (in the case of a
transaction involving the Company), as the case may be, would be entitled to
Incur at least $1.00 of additional Debt under such Coverage Ratio test in the
"Limitation on Debt" covenant set forth in the Indenture. The foregoing
provisions shall not apply to a transaction involving the consolidation or
merger of a Guarantor with or into another person, or the sale, lease,
conveyance or other disposition of all or substantially all of the assets of
such Guarantor, that results in such Guarantor being released from its Guarantee
as provided under "The Guarantees" above.
DEFEASANCE
Under the terms of the Indenture and the Notes, the Company, at its
option, (a) will be discharged from any and all obligations in respect of the
Notes (except in each case for certain obligations to register the transfer or
exchange of Notes, replace stolen, lost or mutilated Notes, maintain paying
agencies and hold moneys for payment in trust) or (b) need not comply with the
covenants of the Indenture nor be subject to the operation of the cross
acceleration provisions described under "Events of Default," in each case, if
the Company irrevocably deposits with the Trustee, in trust, money or U.S.
Government Obligations (as defined in the Indenture) which through the payment
of interest thereon and principal thereof in accordance with their terms will
provide money in an amount sufficient to pay the principal of and interest on
the Notes on the dates such payments are due in accordance with the terms of the
Notes.
To exercise either option above, the Company is required to deliver to
the Trustee an opinion of counsel that the holders of the Notes will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
defeasance had not occurred.
In the event the Company exercises its options under clause (b) of the
second preceding paragraph and the Notes are declared due and payable because of
the occurrence of any Event of Default (other than the cross acceleration
provisions described under "Events of Default" which will be inapplicable), the
amount of money and U.S. Government Obligations on deposit with the Trustee will
be sufficient to pay amounts due on the Notes at the time
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of their stated maturity but may not be sufficient to pay amounts due on the
Notes at the time of the acceleration resulting from such Event of Default.
However, the Company shall remain liable for such payments.
REPORTS
As long as any of the Notes are outstanding, the Company will deliver
to the Trustee and the Trustee will mail to each Holder within 15 days after the
filing of the same with the Commission copies of the quarterly and annual
reports and of the information, documents and other reports with respect to the
Company and the Guarantors, if any, which the Company and the Guarantors may be
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. The Indenture provides that, notwithstanding that neither the
Company nor any of the Guarantors may be required to remain subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will continue to file with the Commission and provide the Trustee and Holders
with such annual and quarterly reports and such information, documents and other
reports with respect to the Company and the Guarantors as are required under
Sections 13 and 15(d) of the Exchange Act. If filing of documents by the Company
with the Commission as aforementioned in this paragraph is not permitted under
the Exchange Act, the Company shall promptly upon written notice supply copies
of such documents to any prospective holder. In addition, the Indenture requires
that for so long as any of the Notes remain outstanding the Company will make
available to any prospective purchaser of the Notes or beneficial owner of the
Notes in connection with any sale thereof the information required by Rule
144A(d)(4) under the Securities Act, until such time as either the Company has
consummated the Exchange Offer or the holders of Notes have disposed of such
Notes pursuant to an effective registration statement filed by the Company.
AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the consent (which may include consents obtained in
connection with a tender offer or exchange offer for Notes) of the Holders of at
least a majority in principal amount of Notes then outstanding, and any existing
Default or Event of Default (other than any continuing Default or Event of
Default in the payment of interest on or the principal of the Notes) under, or
compliance with any provision of, the Indenture may be waived with the consent
(which may include consents obtained in connection with a tender offer or
exchange offer for Notes) of the Holders of a majority in principal amount of
the Notes then outstanding. Without the consent of any Holder, the Company, the
Guarantors and the Trustee may amend the Indenture or the Notes or waive any
provision of the Indenture to cure any ambiguity, defect or inconsistency, to
comply with the "Mergers and Consolidations" section set forth in the Indenture,
to provide for uncertificated Notes in addition to certificated Notes, to make
any change that does not adversely affect the legal rights under the Indenture
of any Holder, to comply with the qualification of the Indenture under the TIA,
or to reflect a Guarantor ceasing to be liable on the Guarantees because it is
no longer a Subsidiary of the Company.
Without the consent of each Holder affected, the Company may not (i)
reduce the amount of Notes whose Holders must consent to an amendment,
supplement or waiver, (ii) reduce the rate of or change the time for payment of
interest, including default interest, on any Note, (iii) reduce the principal of
or change the fixed maturity of any Note or alter the provisions with respect to
redemption under the "Optional Redemption" section set forth in the Indenture,
(iv) make any Notes payable in money other than that stated in the Note, (v)
make any change in certain other provisions set forth in the Indenture, (vi)
adversely modify the ranking or priority of the Notes or any Guarantee, (vii)
release any Guarantor from any of its obligations under its Guarantee or the
Indenture otherwise than in accordance with the terms of the Indenture, or
(viii) waive a continuing Default or Event of Default in the payment of
principal of or interest on the Notes.
NO PERSONAL LIABILITY OF SHAREHOLDERS, OFFICERS, DIRECTORS OR EMPLOYEES
The Indenture provides that no recourse for the payment of the
principal of, premium, if any, or interest on any of the Notes, or for any claim
based thereon or otherwise in respect thereof, and no recourse under or upon any
obligation, covenant or agreement of the Company or any Guarantor in the
Indenture or in any of the Notes or because of the creation of any Debt
represented thereby, shall be had against any shareholder, officer, director,
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employee or controlling person of the Company, any Guarantor or any successor
Person thereof. Each Holder, by accepting such Notes, will waive and release all
such liability.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest (as defined
in the Indenture), it must eliminate such conflict or resign.
The Holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
occurs and is not cured, the Trustee will be required, in the exercise of its
power, to use the degree of care of a prudent person in similar circumstances in
the conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any Holder, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to the Trustee.
GOVERNING LAW
The Indenture, the Notes and the Guarantees will be governed by the internal
laws of the State of New York.
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BOOK-ENTRY; DELIVERY AND FORM
Except as set forth in the next paragraph, the Exchange Notes initially
will be issued in the form of one or more fully registered global Exchange Notes
(collectively, the "Global Exchange Note"). The Global Exchange Note will be
deposited on the Exchange Date with, or on behalf of, DTC and registered in the
name of Cede & Co., as nominee of DTC (such nominee being referred to herein as
the "Global Exchange Note Holder").
Exchange Notes whose holders elect to take physical delivery of their
certificates instead of holding their interests through the Global Exchange Note
(and which are thus ineligible to trade through DTC) will be issued in
registered certificated form ("Certificated Exchange Securities").
DTC is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in such securities between Participants through electronic book-entry changes in
accounts of its Participants. Participants include securities brokers and
dealers (including the Initial Purchaser), banks and trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to other entities such as banks, brokers, dealers and trust companies
(collectively, the "Indirect Participants") that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly.
Persons who are not Participants may beneficially own securities held by or on
behalf of DTC only through Participants or Indirect Participants.
The Company expects that pursuant to procedures established by DTC (i)
upon deposit of the Global Exchange Note, DTC will credit on its internal
system, the principal amount of the Exchange Notes of the individual beneficial
interests represented by such Global Exchange Note to the respective accounts of
exchanging holders who have accounts with DTC and (ii) ownership of the Exchange
Notes evidenced by the Global Exchange Note will be shown on, and the transfer
of ownership thereof will be effected only through, records maintained by DTC
(with respect to the interests of Participants), Participants and Indirect
Participants. Prospective purchasers are advised that the laws of some states
require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer Exchange Notes
evidenced by the Global Exchange Note will be limited to such extent.
So long as DTC, or its nominee, is the registered owner of the Exchange
Notes, DTC or such nominee will be considered the sole holder under the
Indenture of any Exchange Notes evidenced by the Global Exchange Note.
Beneficial owners of Exchange Notes evidenced by the Global Exchange Note will
not be considered the owners or holders thereof under the Indenture for any
purpose, including with respect to the giving of any directions, instructions or
approvals to the Trustee thereunder. Neither the Company nor the Trustee will
have any responsibility or liability for any aspect of the records of DTC or for
maintaining, supervising or reviewing any records of DTC relating to the
Exchange Notes.
Payments in respect of the principal of, premium, if any and interest
on the Global Exchange Note will be made by the Company through the paying agent
to DTC or its nominee, as the case may be, as the registered holder under the
Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the persons in whose names Exchange Notes, including the Global Exchange
Note, are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of Exchange Notes. The Company believes, however, that it is currently the
policy of DTC to immediately credit the accounts of the relevant Participants
with such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of DTC.
Payments by Participants and Indirect Participants to the beneficial owners of
Exchange Notes will be governed by standing instructions and customary practice
and will be the responsibility of Participants or Indirect Participants.
As long as the Exchange Notes are represented by a Global Exchange
Note, DTC's nominee will be the holder of the Exchange Notes and therefore will
be the only entity that can exercise a right to repurchase the Notes. See
"Description of the Exchange Notes -- Optional Redemption" and "Description of
the Exchange Notes -- Certain Covenants." Notice by Participants or Indirect
Participants or by owners of beneficial interests in a Global
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Exchange Note held through such Participants or Indirect Participants of the
exercise of the option to elect repurchase of beneficial interests in Exchange
Notes represented by Global Exchange Note must be transmitted to DTC in
accordance with its procedures on a form required by DTC and provided to
Participants. In order to ensure that DTC's nominee will timely exercise a right
to repurchase with respect to a particular Exchange Note, the beneficial owner
of such Exchange Note must instruct the broker or other Participant or Indirect
Participant through which it holds an interest in such Exchange Note to notify
DTC of its desire to exercise a right to repurchase. Different firms have
different cut-off times for accepting instructions from their customers and,
accordingly, each beneficial owner should consult the broker or other
Participant or Indirect Participant through which it holds an interest in an
Exchange Note in order to ascertain the cut-off time by which such an
instruction must be given in order for timely notice to be delivered to DTC. The
Company will not be liable for any delay in delivery to the paying agent of
notices of the exercise of any option to elect repurchase.
If (i) the Company notifies the Trustee in writing that DTC is no
longer willing or able to act as a depository and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Exchange
Notes in the form of Certificated Securities under the Indenture, then, upon
surrender by DTC of the Global Exchange Note, Exchange Notes in such form will
be issued to each person that DTC identifies as being the beneficial owner of
the related Exchange Notes.
Neither the Company nor the Trustee will be liable for any delay by DTC
in identifying the beneficial owners of Exchange Notes and the Company and the
Trustee may conclusively rely on, and will be protected in relying on,
instructions from DTC for all purposes.
SAME-DAY SETTLEMENT AND PAYMENT. The Indenture requires that payments
in respect of the Exchange Notes represented by the Global Exchange Note
(including principal, premium, if any and interest) be made by wire transfer of
immediately available funds to the accounts specified by DTC. With respect to
Certificated Exchange Securities, the Company will make all payments of
principal, premium, if any, and interest by wire transfer of immediately
available funds to the accounts specified by the holders thereof or, if no such
account is specified, by mailing a check to each such holder's registered
address. The Exchange Notes represented by the Global Exchange Note are expected
to trade in DTC's Same-Day Funds Settlement System, and any permitted secondary
market trading activity in such Notes will, therefore, be required by DTC to be
settled in immediately available funds. The Company expects that secondary
trading in any Certificated Exchange Securities will also be settled in
immediately available funds.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
For U.S. federal income tax purposes, the exchange of an Old Note for a
Exchange Note pursuant to the Exchange Offer should not be treated as a taxable
exchange for U.S. federal income tax purposes. In that event, holders who
exchange their Old Notes for Exchange Notes would not recognize income, gain or
loss for U.S. federal income tax purposes. In addition, a holder's tax basis in
the Exchange Notes would be equal to its adjusted basis in the Old Notes, and
its holding period would include the period during which it held the Old Notes.
Persons considering the exchange of Old Notes for Exchange Notes pursuant to the
Exchange Offer should consult their own tax advisors concerning the application
of the U.S. federal tax laws to their particular situations as well as any
consequences arising under the laws of any other taxing jurisdiction.
The following summary sets forth certain United States federal tax
consequences resulting from the purchase, ownership and disposition of a Note,
whether an Old Note or a Exchange Note. It does not purport to consider all the
possible tax consequences of the purchase, ownership or disposition of the
Notes, and it is not intended to reflect the individual tax position of any
holder. It deals only with Notes held as capital assets. Except as expressly
indicated, it is addressed only to initial holders who purchased Old Notes at
their issue price (as defined below) and does not deal with holders with a
special tax status or special tax situation, such as financial institutions or
dealers in securities or currencies, Notes held as a hedge against currency
risks or as part of a straddle with other investments or as part of a "synthetic
security" or other integrated investment (including a "conversion transaction")
consisting of a Note and one or more other investments, or situations in which
the functional currency of the Note holder is not the U.S. dollar. This
discussion is based upon the United States federal tax laws and regulations as
now in effect and as currently interpreted, and does not take into account
possible changes in such tax laws or such interpretations, all of which may be
applied retroactively. This discussion does not include any description of the
tax laws of any state or local government within the United States, or of any
foreign government, that may be applicable to the Notes or holders thereof.
TAXATION OF U.S. HOLDERS
For purposes of the discussion below, (i) "U.S. Holder" means a
beneficial owner of a Note that is for United States federal income tax purposes
a citizen or resident of the United States, a corporation, partnership or any of
certain other entities created or organized in or under the laws of the United
States, or any political subdivision thereof, or an estate or trust the income
of which is subject to United States federal income taxation regardless of its
source, and (ii) "Non-U.S. Holder" generally means a person other than a U.S.
Holder. The "issue price" of the Old Notes is the first price to the public (not
including bond houses, brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers) at which a
substantial amount of Old Notes was sold for money.
INTEREST PAYMENTS. Interest on a Note will be includible in a U.S.
Holder's gross income as ordinary U.S. source interest income at the time it is
accrued or received in accordance with the U.S. Holder's method of accounting
for United States federal income tax purposes.
SALE, EXCHANGE OR RETIREMENT. A U.S. Holder's tax basis in a Note
generally will be the U.S. dollar cost of the Old Note to such U.S. Holder
reduced by any principal payments received by the U.S. Holder on the Old Note or
the Exchange Note.
Upon sale, exchange or retirement of a Note, a U.S. Holder generally
will recognize gain or loss equal to the difference between the U.S. Holder's
tax basis in the Note and the amount realized on such sale, exchange or
retirement, except to the extent such amount is attributable to accrued
interest. Gain or loss so recognized will be capital gain or loss and will be
long-term capital gain or loss if, at the time of the sale, exchange or
retirement, the Note was held for more than one year. Under current law, net
capital gains of individuals are, under certain circumstances, taxed at lower
rates than items of ordinary income.
62
<PAGE>
TAXATION OF NON-U.S. HOLDERS
Payments of interest (including original issue discount, if any) and
premium, if any, on a Note to a Non-U.S. Holder will not be subject to United
States federal withholding tax, provided that, in the case of interest, such
person (i) does not own, actually or constructively, 10% or more of the total
combined voting power of all classes of stock entitled to vote in the
Company,(ii) is not a controlled foreign corporation related, directly or
indirectly, to the issuer through stock ownership and (iii) is not a bank
receiving interest described in Section 881(c)(3)(A) of the Code, and provided
that the statement described in the next sentence has been provided. Sections
871(h) and881(c) of the Code require that, in order to obtain the exemption from
withholding tax described in the previous sentence, either the beneficial owner
of the Note, or a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "Financial Institution") and that is holding the Note on behalf
of such beneficial owner, file a statement with the withholding agent to the
effect that the beneficial owner of the Note is not a United States person.
Under temporary United States Treasury Regulations which apply to both stated
interest and sale or exchange proceeds if either is paid with respect to a Note
on or before December 31, 1999, the statement may be made by (i) the beneficial
owner of a Note certifying on Internal Revenue Service ("IRS") Form W-8, under
penalties of perjury, that it is not a United States person and provides its
name and address or (ii) any Financial Institution holding the Note on behalf of
the beneficial owner files a statement with the withholding agent to the effect
that it has received such a statement from the holder (and furnishing the
withholding agent with a copy thereof). Recently issued final Treasury
Regulations (the "Final Regulations"), which apply to interest(including
original issue discount) and sale or exchange proceeds paid with respect to a
Note after December 31, 1999, also provide that the requirement of Section
871(h) and 881(c) generally will be satisfied if beneficial owners (including
partners of certain foreign partnerships), as well as certain foreign
partnerships, meet the two conditions set forth in the preceding sentence.
However, a beneficial owner that is a foreign estate or trust (or fiduciary
thereof), a foreign partnership that has entered into a withholding agreement
with the IRS, or a Non-U.S. Holder holding a Note through its United States
branch will be required to provide its "taxpayer identification number" in
addition to its name and address on Form W-8. Foreign partnerships and their
partners should consult their tax advisors regarding possible additional
reporting requirements.
Notwithstanding the foregoing, if interest or other income received
with respect to the Note is effectively connected with a United States trade or
business conducted by a Non-U.S. Holder (and, in the case of a non-U.S. Holder
to whom an income tax treaty applies, is attributable to a U.S. permanent
establishment of the non-U.S. Holder), such holder, although exempt from the
withholding tax described in the preceding paragraph, will be subject to United
States federal income tax on such interest in the same manner as if it were a
United States person. In addition, if such holder is a corporation, it may be
subject to a branch profits tax at a rate of 30% (or a lower treaty rate) of its
effectively connected earnings and profits that are treated as repatriated
during the taxable year.
A Non-U.S. Holder will not be subject to United States federal income
tax on gain realized on the sale, exchange or other disposition of a Note,
unless(i) such holder is an individual who is present in the United States
for183 days or more in the taxable year of disposition, and either (a) such
individual has a "tax home" (as defined in Section 911(d)(3) of the Code) in the
United States (unless such gain is attributable to a fixed place of business in
a foreign country maintained by such individual and has been subject to foreign
tax of at least 10%) or (b) the gain is attributable to an office or other fixed
place of business maintained by such individual in the United States or (ii)
such gain is effectively connected with the conduct by such holder of a trade or
business in the United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. HOLDERS. Information reporting and backup withholding may apply to
payments of interest on or the proceeds from a sale or other disposition of a
Note in the case of certain non-corporate U.S. Holders. Such U.S. Holders
generally will be subject to backup withholding at a rate of 31% unless the
recipient of such payment supplies a taxpayer identification number, certified
under penalty of perjury, as well as certain other information, or otherwise
establishes, in the manner prescribed by law, an exemption from backup
withholding. Any amount withheld under the backup withholding rules is allowable
as credit against the U.S. Holder's federal income tax upon furnishing the
required information.
63
<PAGE>
NON-U.S. HOLDERS. Generally, information reporting and backup
withholding of federal income tax at a rate of 31% may apply to payments of
principal of and interest and premium, if any, on a Note to a Non-U.S. Holder if
the payee fails to certify that the beneficial owner is a Non-U.S. Holder. The
payment of the proceeds of a disposition of a Note to or through the U.S. office
of a U.S. or foreign broker will be subject to information reporting and backup
withholding, unless the owner provides the certification described above or
otherwise establishes an exemption. The proceeds of a disposition by a Non-U.S.
Holder of a Note to or through a foreign office of a broker will not be subject
to backup withholding. However, if such broker is a U.S. person, a controlled
foreign corporation for federal income tax purposes or a foreign person 50% or
more of whose gross income from all sources for certain periods is from
activities that are effectively connected with a U.S. trade or business,
information reporting will apply unless such broker has documentary evidence in
its files of the owner's foreign status and has no actual knowledge to the
contrary or unless the owner otherwise establishes an exemption. Both backup
withholding and information reporting will apply to the proceeds from such
disposition if the broker has actual knowledge that the payee is a U.S. Holder.
The Final Regulations modify the backup withholding and information
reporting requirements in certain respects for payments made after December
31,1999. Holders are urged to consult their tax advisors regarding the
application of the backup withholding and information reporting rules.
64
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes in exchange for Private
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a broker-dealer in connection with resales of Exchange Notes
received in exchange for Private Notes where such Private Notes were acquired as
a result of market-making activities or other trading activities. The Company
has agreed that it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale for a
period of 180 days after consummation of the Exchange Offer, or such shorter
period as will terminate when all Private Notes acquired by broker-dealers for
their own accounts as a result of market-making activities or other trading
activities have been exchanged for Exchange Notes and resold by such
broker-dealers. A broker-dealer that delivers such a prospectus to purchasers in
connection with such resales will be subject to certain of the civil liability
provisions under the Securities Act and will be bound by the provisions of the
Registration Rights Agreement (including certain indemnification rights and
obligations).
The Company will not receive any proceeds from any sale of Exchange
Notes by broker-dealers. Exchange Notes received in exchange for Private Notes
pursuant to the Exchange Offer by broker-dealers for their own account pursuant
to the Exchange Offer may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions, through the writing
of options on the Exchange Notes or a combination of such methods of resale, at
market prices prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer in exchange for Private Notes pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such Exchange Notes may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit on any such resale of Exchange Notes and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. For a period of 180 days
after consummation of the Exchange Offer, or such shorter period as will
terminate when all Private Notes acquired by broker-dealers for their own
accounts as a result of market-making activities or other trading activities
have been exchanged for Exchange Notes and resold by such broker-dealers, the
Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any broker-dealer that requests
such documents in the Letter of Transmittal. The Company has agreed in the
Registration Rights Agreement to indemnify such broker-dealers against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon
on behalf of the Company by Greenberg Traurig Hoffman Lipoff Rosen & Quentel,
P.A.
EXPERTS
The Consolidated Financial Statements of the Company and the related
schedule incorporated by reference in this Prospectus have been audited by BDO
Seidman, LLP, independent certified public accountants, to the extent and for
the periods set forth in their reports incorporated by reference herein, and are
incorporated by reference in reliance upon such reports given upon the authority
of said firm as experts in auditing and accounting.
65
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THIS PROSPECTUS OR THE
ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE
ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------
TABLE OF CONTENTS
PAGE
----
Available Information........................iii
Incorporation of Certain Documents by
Reference...................................iii
Summary........................................1
Risk Factors..................................12
The Exchange Offer............................17
Private Placement.............................23
Use of Proceeds...............................23
Capitalization................................24
Selected Consolidated Financial and
Operating Data...............................25
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 27
Business......................................33
Management....................................39
Description of the Exchange Notes.............41
Book Entry; Delivery and Form.................60
United States Federal Income Tax
Considerations...............................62
Plan of Distribution..........................65
Legal Matters.................................65
Experts.......................................65
[LOGO]
ENGLE HOMES, INC.
OFFER TO EXCHANGE
UP TO $150,000,000 OF ITS
9 1/4% SERIES C SENIOR NOTES DUE 2008 FOR ANY
AND ALL OUTSTANDING
9 1/4% SENIOR NOTES DUE 2008
($100,000,000 PRINCIPAL AMOUNT OUTSTANDING)
AND 9 1/4% SERIES B SENIOR NOTES DUE 2008
($50,000,000 PRINCIPAL AMOUNT OUTSTANDING)
------------------------------------------
PROSPECTUS
------------------------------------------
, 1998
- ----------------------------------------------
- ----------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant has authority under the Florida Business Corporation Act
to indemnify its directors and officers to the extent provided in such statute.
The Registrant's Amended and Restated Articles of Incorporation provide that the
Registrant shall indemnify its executive officers and directors to the fullest
extent permitted by law either now or hereafter. The Registrant has also entered
into an agreement with each of its directors and certain of its officers wherein
it is agreeing to indemnify each of them to the fullest extent permitted by law.
In general, Florida law permits a Florida corporation to indemnify its
directors, officers, employees and agents, and persons serving at the
corporation's request in such capacities for another enterprise against
liabilities arising from conduct that such persons reasonably believed to be in,
or not opposed to, the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful.
The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of a director and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of nonmonetary relief will remain available under Florida law. In addition, each
director will continue to be subject to liability for (a) violations of the
criminal law, unless the director had reasonable cause to believe his conduct
was lawful or had no reasonable cause to believe his conduct was unlawful, (b)
deriving an improper personal benefit from a transaction, (c) voting for or
assenting to an unlawful distribution, and (d) willful misconduct or a conscious
disregard for the best interests of the Registrant in a proceeding by or in the
right of the Registrant to procure a judgment in its favor or in a proceeding by
or in the right of a shareholder. The statute does not affect a director's
responsibilities under any other law, such as the Federal securities laws or
state or Federal environmental laws.
At present, there is no pending litigation or proceeding involving a
director or officer of the Registrant as to which indemnification is being
sought from the Registrant, nor is the Registrant aware of any threatened
litigation that may result in claims for indemnification from the Registrant by
any officer or director.
II-1
<PAGE>
ITEM 21. EXHIBITS.
EXHIBIT DESCRIPTION
------- -----------
4.1 Indenture, dated June 12, 1998, between the Registrant,
the Guarantors named therein and the American Stock
Transfer & Trust Company, as trustee.
4.2 Form of Exchange Note (included in Exhibit 4.1).
4.3 Registration Rights Agreement, dated as of June 12,
1998, by and among the Registrant, the Guarantors named
therein and Jefferies & Company, Inc.
5.1 Opinion of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A.
10.1 Registrant's Third Amended and Restated 1991 Stock
Option Plan (Compensatory Plan), hereby incorporated
by reference to Exhibit A of Registrant's Proxy
Statement for its 1998 Annual Meeting.
10.2 Indemnification Agreement between the Registrant and
each of its directors and certain executive officers,
hereby incorporated by reference to Exhibit 10.2 of the
Company's Registration Statement of Form S-1
(File No. 33-58678).
10.3 Asset Purchase Agreement, dated May 13, 1994, among
Engle Homes, Inc., Park Homes West, Inc. and David H.
Feinberg, and Amendment No. 1 thereto, dated June 14,
1994, hereby incorporated by reference to Exhibit 2.1 of
the Registrant's Current Report on Form 8-K, dated
June 28, 1994.
10.4 Registrant's Amended and Restated 1997 Bonus
Performance Plan (Compensatory Plan), hereby
incorporated by reference to Exhibit B of Registrant's
Proxy
Statement for its 1998 Annual Meeting.
10.5 Indenture, dated as of February 2, 1998, relating to
the Registrant's 9 1/4% Senior Notes due 2008, hereby
incorporated by reference to Exhibit 4.1 of the
Registrant's Registration Statement on Form S-2
(File No. 333-40741).
10.6 Credit Agreement, dated as of May 28, 1998, by and among
the Registrant, as Borrower, the Banks named therein,
SunTrust Bank, South Florida, National Association, a
national banking association, as Administrative Agent,
and NationsBank, N.A., a national banking association,
as Documentation Agent.
12.1 Statement of Computation of Ratio of Earnings to Fixed
Charges.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A. (included in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page).
25.1 Statement of Eligibility on Form T-1 of Trustee.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Tender Instruction Letters.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to
II-2
<PAGE>
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
The registrant undertakes that every prospectus (i) that is filed
pursuant to the immediately preceding paragraph, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES, INC.
By: /S/ ALEC ENGELSTEIN
----------------------------------
Alec Engelstein, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ ALEC ENGELSTEIN Chairman of the Board, President and July 14, 1998
- ---------------------------------------- Chief Executive Officer
Alec Engelstein (Principal Executive Officer)
/S/ DAVID SHAPIRO Vice President - Finance, Chief July 14, 1998
- ---------------------------------------- Financial Officer and Director
David Shapiro (Principal Financial Officer)
/S/ PAUL LEIKERT Vice President - Chief Accounting July 14, 1998
- ---------------------------------------- Officer
Paul Leikert (Principal Accounting Officer)
/S/ HARRY ENGELSTEIN Executive Vice President, Chief July 14, 1998
- ---------------------------------------- Construction Officer and Director
Harry Engelstein
/S/ JOHN A. KRAYNICK Senior Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
/S/ HENRY H. FISHKIND Director July 14, 1998
- ----------------------------------------
Henry H. Fishkind
/S/ RONALD J. KORN Director July 14, 1998
- ----------------------------------------
Ronald J. Korn
/S/ ALAN L. SHULMAN Director July 14, 1998
- ----------------------------------------
Alan L. Shulman
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
BANYAN TRAILS, INC.
By: /S/ DAVID SHAPIRO
------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ ALEC ENGELSTEIN President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
BILTMORE SOUTH CORP.
By: /S/ DAVID SHAPIRO
--------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ ALEC ENGELSTEIN President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ HARRY ENGELSTEIN Vice President July 14, 1998
- ---------------------------------------- and Director
Harry Engelstein
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/ARIZONA, INC.
By: /S/ DAVID SHAPIRO
-----------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ MARK UPTON President July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Mark Upton
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/ARIZONA CONSTRUCTION, INC.
By: /S/ MARK UPTON
-----------------------------------------
Mark Upton, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ MARK UPTON President July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Mark Upton
/S/ KAREN MURRA Treasurer and Assistant Secretary July 14, 1998
- ---------------------------------------- (Principal Financial Officer and
Karen Murray Principal Accounting Officer)
/S/ ALEC ENGELSTEIN Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Director July 14, 1998
- ----------------------------------------
David Shapiro
/S/ JOHN A. KRAYNICK Director July 14, 1998
- ----------------------------------------
John A. Kraynick
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/ATLANTA, INC.
By: /S/ DAVID SHAPIRO
----------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ GEOFFREY BRUNNING President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Geoffrey Brunning
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
/S/ HARRY ENGELSTEIN Vice President July 14, 1998
- ---------------------------------------- and Director
Harry Engelstein
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/BROWARD, INC.
By: /S/ DAVID SHAPIRO
-------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ HARRY ENGELSTEIN President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Harry Engelstein
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/COLORADO, INC.
By: /S/ DAVID SHAPIRO
---------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ ERIC ECKBERG President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Eric Eckberg
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/GULF COAST, INC.
By: /S/ DAVID SHAPIRO
----------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ STEVEN BURGARD President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Steven Burgard
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/JACKSONVILLE, INC.
By: /S/ DAVID SHAPIRO
---------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ ALEC ENGELSTEIN President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/LAKE BERNADETTE, INC.
By: /S/ DAVID SHAPIRO
---------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ ALEC ENGELSTEIN President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/NORTH CAROLINA, INC.
By: /S/ DAVID SHAPIRO
---------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ ALEC ENGELSTEIN President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/ORLANDO, INC.
By: /S/ DAVID SHAPIRO
--------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ WILLIAM CARMICHAEL President and Director July 14, 1998
- --------------------------------------- (Principal Executive Officer)
William Carmichael
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/PALM BEACH, INC.
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ HARRY ENGELSTEIN President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Harry Engelstein
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/PEMBROKE, INC.
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ HARRY ENGELSTEIN President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Harry Engelstein
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/SOUTHWEST FLORIDA, INC.
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ ROBERT WOLFE President July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Robert Wolfe
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/TEXAS, INC.
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ MICHAEL J. MOORE President July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Michael J. Moore
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES/VIRGINIA, INC.
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ BRUCE LEINBERGER President July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Bruce Leinberger
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form S-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boca Raton, State of Florida, on July 14, 1998.
GREENLEAF HOMES, INC.
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ GEOFFREY BRUNNING President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Geoffrey Brunning
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
PEMBROKE FALLS REALTY, INC.
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ ALEC ENGELSTEIN President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
PREFERRED BUILDERS REALTY, INC.
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ PAUL ACKERMAN President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Paul Ackerman
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
PREFERRED HOME MORTGAGE COMPANY
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ DAN KLINGER President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Dan Klinger
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ST. TROPEZ AT BOCA GOLF, INC.
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ ALEC ENGELSTEIN President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Alec Engelstein
/S/ HARRY ENGELSTEIN Vice President July 14, 1998
- ---------------------------------------- and Director
Harry Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
</TABLE>
II-26
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
UNIVERSAL LAND TITLE, INC.
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ MICHAEL GLASS President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Michael Glass
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
UNIVERSAL LAND TITLE OF COLORADO, INC.
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ MICHAEL GLASS President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Michael Glass
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
</TABLE>
II-28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton,
State of Florida, on July 14, 1998.
ENGLE HOMES REALTY, INC.
By: /S/ DAVID SHAPIRO
------------------------------------
David Shapiro, Vice President,
Secretary and Treasurer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints David Shapiro his true and lawful
attorney-in-fact with full powers of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
amendments, including any post-effective amendments, to this registration
statement and any filings made pursuant to Rule 462 under the Securities Act,
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ GEOFFREY BRUNNING President and Director July 14, 1998
- ---------------------------------------- (Principal Executive Officer)
Gerffrey Brunning
/S/ ALEC ENGELSTEIN Vice President and Director July 14, 1998
- ----------------------------------------
Alec Engelstein
/S/ DAVID SHAPIRO Vice President, Secretary, Treasurer July 14, 1998
- ---------------------------------------- and Director
David Shapiro (Principal Financial Officer and
Principal Accounting Officer)
/S/ JOHN A. KRAYNICK Vice President July 14, 1998
- ---------------------------------------- and Director
John A. Kraynick
/S/ HARRY ENGELSTEIN Vice President July 14, 1998
- ---------------------------------------- and Director
Harry Engelstein
</TABLE>
II-29
<PAGE>
EXHIBIT DESCRIPTION
------- -----------
4.1 Indenture, dated June 12, 1998, between the Registrant,
the Guarantors named therein and the American Stock
Transfer & Trust Company, as trustee.
4.3 Registration Rights Agreement, dated as of June 12,
1998, by and among the Registrant, the Guarantors named
therein and Jefferies & Company, Inc.
5.1 Opinion of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel, P.A.
10.6 Credit Agreement, dated as of May 28, 1998, by and among
the Registrant, as Borrower, the Banks named therein,
SunTrust Bank, South Florida, National Association, a
national banking association, as Administrative Agent,
and NationsBank, N.A., a national banking association,
as Documentation Agent.
12.1 Statement of Computation of Ratio of Earnings to Fixed
Charges.
23.1 Consent of BDO Seidman, LLP.
25.1 Statement of Eligibility on Form T-1 of Trustee.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Tender Instruction Letters.
EXHIBIT 4.1
- --------------------------------------------------------------------------------
ENGLE HOMES, INC.,
THE GUARANTORS PARTY HERETO
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Trustee
----------------
INDENTURE
Dated as of June 12, 1998
----------------
9 1/4% Series B Senior Notes
due February 1, 2008
9 1/4% Series C Senior Notes
due February 1, 2008
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
TIA INDENTURE
SECTION SECTION
- ------- ---------
310(a)(1) ............................................... 7.10
(a)(2)............................................. 7.10
(a)(3)............................................. N.A.
(a)(4)............................................. N.A.
(a)(5)............................................. 7.10
(b)................................................ 7.08; 7.10; 11.02
(c)................................................ N.A.
311(a)................................................... 7.11
(b)................................................ 7.11
(c)................................................ N.A.
312(a)................................................... 2.05
(b)................................................ 11.03
(c)................................................ 11.03
313(a)................................................... 7.06
(b)(1)............................................. 7.06
(b)(2)............................................. 7.06
(c)................................................ 7.06; 11.02
(d)................................................ 7.06
314(a)................................................... 4.03; 4.04; 11.02
(b)................................................ N.A.
(c)(1)............................................. 11.04
(c)(2)............................................. 11.04
(c)(3)............................................. N.A.
(d)................................................ N.A.
(e)................................................ 11.05
(f)................................................ N.A.
315(a)................................................... 7.01(b)
(b)................................................ 7.05; 11.02
(c)................................................ 7.01(a)
(d)................................................ 7.01(c)
(e)................................................ 6.11
316(a) (last sentence)................................... 2.09
(a)(1)(A).......................................... 6.05
(a)(1)(B).......................................... 6.04
(a)(2)............................................. N.A.
(b)................................................ 6.06; 6.07
317(a)(1)................................................ 6.08
(a)(2)............................................. 6.09
(b)................................................ 2.04
318(a)................................................... 11.01
318(c)................................................... 11.01
- ---------------------
N.A. means Not Applicable.
This cross-reference table does not constitute a part of the Indenture.
-i-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE..............................................................1
SECTION 1.01. Definitions......................................................................................1
SECTION 1.02. Other Definitions...............................................................................16
SECTION 1.03. Incorporation by Reference of Trust Indenture Act...............................................17
SECTION 1.04. Rules of Construction...........................................................................17
ARTICLE 2 THE SECURITIES.........................................................................................18
SECTION 2.01. Form and Dating.................................................................................18
SECTION 2.02. Execution and Authentication....................................................................19
SECTION 2.03. Registrar and Paying Agent......................................................................20
SECTION 2.04. Paying Agent to Hold Money in Trust.............................................................20
SECTION 2.05. Securityholder Lists............................................................................20
SECTION 2.06. Transfer and Exchange...........................................................................21
SECTION 2.07. Replacement Securities..........................................................................21
SECTION 2.08. Outstanding Securities..........................................................................22
SECTION 2.09. Securities Held by the Company or an Affiliate..................................................22
SECTION 2.10. Temporary Securities............................................................................22
SECTION 2.11. Cancellation....................................................................................22
SECTION 2.12. Defaulted Interest..............................................................................23
SECTION 2.13. CUSIP Number....................................................................................23
SECTION 2.14. Book-Entry Provisions for Global Securities.....................................................23
SECTION 2.15. Registration of Transfers and Exchanges.........................................................24
ARTICLE 3 REDEMPTION.............................................................................................28
SECTION 3.01. Notices to Trustee..............................................................................28
SECTION 3.02. Selection of Securities to Be Redeemed..........................................................28
SECTION 3.03. Notice of Redemption............................................................................28
SECTION 3.04. Effect of Notice of Redemption..................................................................29
SECTION 3.05. Deposit of Redemption Price.....................................................................29
SECTION 3.06. Securities Redeemed in Part.....................................................................29
ARTICLE 4 COVENANTS..............................................................................................30
SECTION 4.01. Payment of Securities...........................................................................30
SECTION 4.02. Maintenance of Office or Agency.................................................................30
SECTION 4.03. SEC Reports.....................................................................................30
SECTION 4.04. Compliance Certificate..........................................................................31
SECTION 4.05. Stay, Extension and Usury Laws..................................................................31
SECTION 4.06. Corporate Existence.............................................................................31
SECTION 4.07. Notice of Default...............................................................................32
SECTION 4.08. Change of Control...............................................................................32
SECTION 4.09. Maintenance of Net Worth........................................................................34
SECTION 4.10. Limitation on Debt..............................................................................36
SECTION 4.11. Limitation on Restricted Payments...............................................................37
SECTION 4.12. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries........38
SECTION 4.13. Limitation on Liens.............................................................................39
SECTION 4.14. Transactions with Affiliates....................................................................39
SECTION 4.15. Limitation on Asset Sales.......................................................................40
SECTION 4.16. Additional Guarantors...........................................................................42
ARTICLE 5 SUCCESSORS.............................................................................................43
SECTION 5.01. When Company May Merge, etc.....................................................................43
SECTION 5.02. Successor Substituted...........................................................................44
ARTICLE 6 DEFAULTS AND REMEDIES..................................................................................44
SECTION 6.01. Events of Default...............................................................................44
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
SECTION 6.02. Acceleration......................................................................46
SECTION 6.03. Other Remedies....................................................................46
SECTION 6.04. Waiver of Past Defaults...........................................................47
SECTION 6.05. Control by Majority...............................................................47
SECTION 6.06. Limitation on Suits...............................................................47
SECTION 6.07. Rights of Holders to Receive Payment..............................................47
SECTION 6.08. Collection Suit by Trustee........................................................48
SECTION 6.09. Trustee May File Proofs of Claim..................................................48
SECTION 6.10. Priorities........................................................................48
SECTION 6.11. Undertaking for Costs.............................................................48
ARTICLE 7 TRUSTEE..................................................................................49
SECTION 7.01. Duties of Trustee.................................................................49
SECTION 7.02. Rights of Trustee.................................................................50
SECTION 7.03. Individual Rights of Trustee......................................................51
SECTION 7.04. Trustee's Disclaimer..............................................................51
SECTION 7.05. Notice of Defaults................................................................51
SECTION 7.06. Reports by Trustee to Holders.....................................................51
SECTION 7.07. Compensation and Indemnity........................................................51
SECTION 7.08. Replacement of Trustee............................................................52
SECTION 7.09. Successor Trustee by Merger, etc..................................................53
SECTION 7.10. Eligibility; Disqualification.....................................................53
SECTION 7.11. Preferential Collection of Claims Against Company.................................53
ARTICLE 8 DEFEASANCE...............................................................................53
SECTION 8.01. Defeasance upon Deposit of Moneys or U.S. Government Obligations..................53
SECTION 8.02. Termination of the Obligations Pursuant to Redemption.............................55
SECTION 8.03. Survival of Company's Obligations.................................................55
SECTION 8.04. Application of Trust Money........................................................56
SECTION 8.05. Repayment to Company..............................................................56
SECTION 8.06. Reinstatement.....................................................................56
ARTICLE 9 AMENDMENTS...............................................................................57
SECTION 9.01. Without Consent of Holders........................................................57
SECTION 9.02. With Consent of Holders...........................................................57
SECTION 9.03. Compliance with Trust Indenture Act...............................................58
SECTION 9.04. Revocation and Effect of Consents.................................................58
SECTION 9.05. Notation on or Exchange of Securities.............................................59
SECTION 9.06. Trustee Protected.................................................................59
ARTICLE 10 GUARANTEE OF SECURITIES.................................................................59
SECTION 10.01. Guarantee........................................................................59
SECTION 10.02. Execution and Delivery of Guarantee..............................................62
SECTION 10.03. Additional Guarantors............................................................62
SECTION 10.04. Release of a Guarantor...........................................................62
ARTICLE 11 MISCELLANEOUS...........................................................................63
SECTION 11.01. Trust Indenture Act Controls.....................................................63
SECTION 11.02. Notices..........................................................................63
SECTION 11.03. Communication by Holders with Other Holders......................................64
SECTION 11.04. Certificate and Opinion as to Conditions Precedent...............................64
SECTION 11.05. Statements Required in Certificate or Opinion....................................65
SECTION 11.06. Rules by Trustee and Agents......................................................65
SECTION 11.07. Legal Holidays...................................................................65
SECTION 11.08. No Recourse Against Others.......................................................66
SECTION 11.09. Duplicate Originals..............................................................66
SECTION 11.10. Governing Law....................................................................66
SECTION 11.11. No Adverse Interpretation of Other Agreements....................................66
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
SECTION 11.12. Successors.......................................................................66
SECTION 11.13. Separability.....................................................................66
SECTION 11.14. Table of Contents, Headings, etc.................................................66
SIGNATURES....................................................................................67
</TABLE>
EXHIBIT A-1 - FORM OF SERIES B SECURITY
EXHIBIT A-2 - FORM OF SERIES C SECURITY
EXHIBIT B - FORM OF LEGEND FOR GLOBAL SECURITIES
EXHIBIT C - FORM OF CERTIFICATE DELIVERABLE UPON TRANSFER OR
EXCHANGE OF SECURITIES
EXHIBIT D - TRANSFEREE CERTIFICATE FOR NON-QIB ACCREDITED
INVESTORS
NOTE: This Table of Contents shall not, for any purpose, be deemed to be part of
the Indenture.
-iv-
<PAGE>
INDENTURE dated as of June 12, 1998 between ENGLE HOMES, INC., a
Florida corporation (the "Company"), the Guarantors signatory hereto (the
"Guarantors") and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York
Corporation, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Series B Securities and
the Series C Securities (as such terms are hereinafter defined), without
preference of one such series over the other.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS
"1994 INDENTURE" means the indenture governing the $40,000,000
principal amount of 11 3/4% Senior Notes due 2000 of the Company.
"ADDITIONAL ASSETS" means assets used or usable by the Company or any
of its Restricted Subsidiaries in the operation of the existing lines of
business of the Company and its Restricted Subsidiaries.
"AFFILIATE" of any Person means (i) any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person and (ii) any other Person that beneficially owns at
least 10% of the voting common stock of such Person. For the purposes of this
definition, "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.
"AGENT" means any Registrar, Paying Agent, or co-Registrar.
"ASSET SALE" for any Person means the sale, lease, conveyance or other
disposition (including, without limitation, by merger, consolidation or sale and
leaseback transaction, and whether by operation of law or otherwise) of any of
that Person's assets (including, without limitation, the sale or other
disposition of Capital Stock of any Subsidiary of such Person, whether by such
Person or such Subsidiary) outside the ordinary course of business, whether
owned on February 2, 1998 or subsequently acquired in one transaction or a
series of related transactions, in which such Person and/or its Subsidiaries
receive cash and/or other consideration (including, without limitation, the
unconditional assumption of Indebtedness of such Person and/or its Subsidiaries)
of $2,500,000 or more as to each such transaction or series of related
transactions; PROVIDED, HOWEVER, that (i) a transaction or series of related
transactions that results in a Change of Control will not constitute an Asset
Sale, (ii) sales, leases, conveyances or other dispositions of real estate
related to the homebuilding business of the Company or its Subsidiaries will not
constitute Asset Sales, and (iii) transactions between the Company and any
Guarantor, or among such Guarantors, will not constitute Asset Sales.
<PAGE>
"BANK FACILITY" means, collectively, one or more commitments from one
or more banks or other lending institutions to lend funds, together with any and
all agreements, documents and instruments from time to time delivered in
connection therewith as such commitments or any such agreements, documents or
instruments may be in effect or amended, amended and restated, renewed,
extended, restructured, supplemented or otherwise modified from time to time and
any credit agreement, loan agreement, note purchase agreement, indenture or
other agreement, document or instrument refinancing, refunding or otherwise
replacing such Bank Facility, whether or not with the same agent, trustee,
representative, lenders or holders, and, subject to the proviso to the next
succeeding sentence, irrespective of any changes in the terms and conditions
thereof. Without limiting the generality of the foregoing, the term "Bank
Facility" shall include any amendment, amendment and restatement, renewal,
extension, restructuring, supplement or modification to any Bank Facility and
all refundings, refinancings and replacements of any Bank Facility, including
any agreement (i) extending the maturity of any Debt Incurred thereunder or
contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder; PROVIDED that such borrowers and issuers include one or more of the
Company and its Subsidiaries and their respective successors and assigns, (iii)
increasing the amount of Debt Incurred thereunder or available to be borrowed
thereunder; PROVIDED that on the date thereof such Debt would not be prohibited
by clause (b) of the definition of Permitted Debt, or (iv) otherwise altering
the terms and conditions thereof in a manner not prohibited by the terms of this
Indenture.
"CAPITAL STOCK" of any Person means any and all shares, interests,
participations or other equivalents (designated) of capital stock of such Person
and all warrants or options to acquire such capital stock.
"CHANGE OF CONTROL" of the Company shall be deemed to have occurred
upon the occurrence of any of the following events: (a) any "person" or "group"
(as such terms are used in Sections 13(d) and 14(d) of the Exchange Act),
excluding the Permitted Holders, is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that such
person has the right to acquire, whether such right is exercisable immediately,
after the passage of time, upon the happening of an event or otherwise),
directly or indirectly, of more than 50% of the total Voting Stock of the
Company; but only if the Permitted Holders do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the board of directors of the Company; (b) the Company consolidates
with, or merges with or into, another Person or sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person, or any Person consolidates with, or merges with or into,
the Company, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where immediately
after such transaction no "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), excluding the Permitted Holders,
is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire, whether
such right is exercisable immediately, after the passage of time, upon the
happening of an event or otherwise), directly or indirectly, of more than 50% of
-2-
<PAGE>
the total Voting Stock of the surviving or transferee corporation; but only if
the Permitted Holders do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the board of
directors of the Company; (c) at any time during any consecutive two-year
period, individuals who at the beginning of such period constituted the board of
directors of the Company (together with any new directors whose election by such
board of directors or whose nomination for election by the stockholders of the
Company was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the board of directors of the Company then in
office; or (d) the Company is liquidated or dissolved or adopts a plan of
liquidation.
"COMMON STOCK" means the common stock, par value $.01 per share, of the
Company.
"COMPANY" means the party named as such above and any other obligor
until a successor replaces it pursuant to the applicable provision hereof and
thereafter means the successor.
"CONSOLIDATED INTEREST EXPENSE" of the Company means, for any period,
the aggregate amount of interest which, in accordance with generally accepted
accounting principles, would be included on an income statement for the Company
and its Restricted Subsidiaries on a consolidated basis, whether expensed
directly, or included as a component of cost of goods sold, or allocated to
joint ventures or otherwise (including, but not limited to, imputed interest
included on 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 associated with hedging obligations, 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 non-cash
interest expense), excluding interest expense related to the Company's mortgage
banking operations, PLUS the product of (x) the sum of (i) cash dividends paid
on any Preferred Stock of the Company PLUS (ii) cash dividends, the principal
amount of any debt securities issued as a dividend, the liquidation value of any
Preferred Stock issued as a dividend and the fair market value (as determined by
the Company's board of directors in good faith) of any other non-cash dividends,
in each case, paid on any Preferred Stock of any Restricted Subsidiary of the
Company (other than a Wholly-Owned Restricted Subsidiary), times (y) a fraction,
the numerator of which is one and the denominator of which is one MINUS the then
current effective aggregate federal, state and local tax rate of the Company,
expressed as a decimal.
"CONSOLIDATED INTEREST INCURRED" of the Company means, for any period,
(a) the aggregate amount of interest which, in accordance with generally
accepted accounting principles, would be included on an income statement for the
Company and its Restricted Subsidiaries on a consolidated basis, whether
expensed directly, or included as a component of cost of goods sold, or
allocated to joint ventures or otherwise (including, but not limited to, imputed
interest included on 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 associated with hedging obligations,
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
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non-cash interest expense), excluding interest expense related to the Company's
mortgage banking operations, PLUS OR MINUS, without duplication, (b) the
difference between capitalized interest for such period and the interest
component of cost of goods sold for such period, PLUS (c) the product of (x) the
sum of (i) cash dividends paid on any Preferred Stock of the Company PLUS (ii)
cash dividends, the principal amount of any debt securities issued as a
dividend, the liquidation value of any Preferred Stock issued as a dividend and
the fair market value (as determined by the Company's board of directors in good
faith) of any other non-cash dividends, in each case, paid on any Preferred
Stock of any Restricted Subsidiary of the Company (other than a Wholly-Owned
Restricted Subsidiary), times (y) a fraction, the numerator of which is one and
the denominator of which is one MINUS the then current effective aggregate
federal, state and local tax rate of the Company, expressed as a decimal.
"CONSOLIDATED NET INCOME" of the Company, for any period, means the net
income (loss) of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis, in accordance with generally accepted
accounting principles; PROVIDED that, without duplication, (i) the net income of
any Person, other than a Restricted Subsidiary which is consolidated with the
Company, in which any Person other than the Company and its Restricted
Subsidiaries has an interest shall be included only to the extent of the amount
of cash dividends or distributions actually paid to the Company or a Restricted
Subsidiary during such period, (ii) the net income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iii) the net income of any Subsidiary of the
Company shall be excluded to the extent such Subsidiary is prohibited, directly
or indirectly, from distributing such net income or any portion thereof to the
Company or a Restricted Subsidiary, (iv) all extraordinary gains and losses
(after taxes) that would be included on an income statement for such period
shall be excluded and (v) all gains and losses (after taxes) attributable to
Asset Sales shall be excluded; PROVIDED that there shall be included in such net
income, without duplication, the net income of any Unrestricted Subsidiary to
the extent such net income is actually received by the Company or any of its
Restricted Subsidiaries in cash during such period.
"CONSOLIDATED NON-CASH CHARGES" of the Company means, for any period,
the aggregate depreciation, amortization and other non-cash charges (other than
reserves or expenses established in anticipation of future cash requirements
such as reserves for taxes and uncollectible accounts) of the Company and its
Restricted Subsidiaries on a consolidated basis for such period, as determined
in accordance with generally accepted accounting principles; PROVIDED that
Consolidated Non-cash Charges shall exclude (i) any charges that are not
included for the purpose of determining Consolidated Net Income, (ii) any
charges that are included for the purpose of determining Consolidated Interest
Expense or Consolidated Tax Expense and (iii) any charges representing
capitalized selling, general and administrative expenses that are expensed
during such period as cost of goods sold.
"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 and less the assets securing the payment of Non-Recourse
Debt of the Company and its Restricted Subsidiaries) on
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a consolidated basis at the end of the fiscal quarter immediately preceding such
date, as determined in accordance with generally accepted accounting principles,
less: (i) unamortized debt and debt issuance expense, deferred charges,
goodwill, patents, trademarks, copyrights, and all other items which would be
treated as intangibles on the consolidated balance sheet of the Company and its
Restricted Subsidiaries prepared in accordance with generally accepted
accounting principles and (ii) appropriate adjustments on account of minority
interests of other Persons holding equity investments in Restricted
Subsidiaries, in the case of each of clauses (i) and (ii) above, as reflected on
the consolidated balance sheet of the Company and its Restricted Subsidiaries.
"CONSOLIDATED TANGIBLE NET WORTH" of the Company means the Company's
Net Worth less unamortized debt and debt issuance expense, deferred charges,
goodwill, patents, trademarks, copyrights, and all other items which would be
treated as intangibles on the consolidated balance sheet of the Company and its
Restricted Subsidiaries prepared in accordance with generally accepted
accounting principles.
"CONSOLIDATED TAX EXPENSE" of the Company means, for any period, the
aggregate of the tax expense of the Company and its Restricted Subsidiaries for
such period, determined on a consolidated basis, in accordance with generally
accepted accounting principles.
"CONVERTIBLE NOTES" means up to $15,000,000 principal amount of the
Company's 7% Convertible Subordinated Notes due March 1, 2003.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 11.02 or such other address as the Trustee may give
notice of to the Company.
"COVERAGE RATIO" of the Company means the ratio of the Company's EBITDA
to its Consolidated Interest Incurred for the four fiscal quarters ending
immediately prior to the date of determination. Notwithstanding clause (ii) of
the definition of Consolidated Net Income, if the Debt which is being Incurred
is Incurred in connection with an acquisition by the Company or a Restricted
Subsidiary, the Coverage Ratio shall be determined after giving effect to both
the Consolidated Interest Incurred related to the Incurrence of such Debt and
the EBITDA (x) of the Person becoming a Restricted Subsidiary of the Company or
(y) in the case of an acquisition of assets that constitute substantially all of
an operating unit or business, relating to the assets being acquired by the
Company or a Restricted Subsidiary.
"DEBT" means, as to any Person, without duplication, (a) any
indebtedness of such Person for borrowed money, (b) all indebtedness of such
Person evidenced by bonds, debentures, notes, letters of credit, drafts or
similar instruments, (c) all indebtedness of such Person to pay the deferred
purchase price of property or services, but not including accounts payable and
accrued expenses arising in the ordinary course of business, (d) all capitalized
lease obligations of such Person, (e) all Debt of others secured by a Lien on
any asset of such Person, whether or not such Debt is assumed by such Person or
guaranteed by such Person, (f) Redeemable Stock of such Person and Preferred
Stock of any Subsidiary of such Person, (g) all obligations of such Person with
respect to Interest Rate Protection Agreements and (h) all Debt of others
guaranteed by such
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Person. The amount of all Debt of any Person at any date pursuant to clauses
(a) - (d) and (f) above shall be as would appear as a liability upon a balance
sheet of such Person prepared on a consolidated basis in accordance with
generally accepted accounting principles. Notwithstanding the foregoing, "Debt"
of the Company shall not include the amount reflected on a consolidated balance
sheet of the Company with respect to options to acquire real property which was
purchased by the Company and sold to a third party within 360 days of such
purchase for consideration at least equal to the amount paid by the Company for
such property less an amount equal to the value of such option.
"DEFAULT" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"DEPOSITORY" means, with respect to the Securities issued in the form
of one or more Global Securities, The Depository Trust Company or another Person
designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"EBITDA" for the Company, for any period, means, without duplication,
the Consolidated Net Income of the Company plus, to the extent deducted in
calculating Consolidated Net Income, the sum of (a) Consolidated Tax Expense,
(b) Consolidated Interest Expense and (c) Consolidated Non-cash Charges.
"EQUITY OFFERING" means the public offering by the Company of up to
2,700,000 shares of Common Stock by means of a prospectus dated January 28,
1998, plus up to 405,000 additional shares of Common Stock which may be sold by
the Company pursuant to a 30-day option granted to Smith Barney Inc., Jefferies
& Company, Inc. and Southeast Research Partners, Inc.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING DEBT" means all of the Debt of the Company and its Restricted
Subsidiaries that was outstanding on February 2, 1998.
"EXISTING GUARANTEES" means the guarantees of the Company's obligations
under the Existing Indenture.
"EXISTING INDENTURE" means the Indenture dated as of February 2, 1998
among the Company, the guarantors party thereto and American Stock Transfer &
Trust Company, as Trustee.
"EXISTING SENIOR NOTES" means the $100,000,000 aggregate principal
amount of the Company's 9 1/4% Senior Notes due February 1, 2008, issued under
the Existing Indenture, which rank PARI PASSU with the Securities in all
respects.
"GLOBAL SECURITY" means a Security evidencing all or a part of the
Securities issued to the Depository in accordance with Section 2.01 and bearing
the legend prescribed in Exhibit B.
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"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt of such other Person (whether by agreement to keepwell or to maintain
financial condition or otherwise); PROVIDED that the term "guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business.
"GUARANTEE" means the guarantee of the Company's obligations hereunder
made by a Guarantor in favor of the Holders pursuant to the terms of Article 10
hereof.
"GUARANTOR" means all of the Restricted Subsidiaries of the Company
(other than, in the Company's discretion, any Restricted Subsidiary the assets
of which have a book value of not more than $1,000,000) existing on the date
hereof and any person who becomes a guarantor pursuant to Section 10.03.
"HOLDER" or "SECURITYHOLDER" means a Person in whose name a Security is
registered on the Registrar's books.
"HOMEBUILDING JOINT VENTURE" means (i) any Unrestricted Subsidiary and
(ii) any person which is not a Guarantor in which the Company or any of its
Subsidiaries has an ownership interest and in which no other person has a
greater beneficial ownership interest than the beneficial ownership interest of
the Company that, in each case, was formed for and is engaged in homebuilding
operations.
"INDENTURE" means this Indenture, as amended, supplemented or otherwise
modified from time to time, in accordance with the terms hereof.
"INDEPENDENT FINANCIAL ADVISOR" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the board of directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"INITIAL PURCHASER" means Jefferies & Company, Inc.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"INTEREST RATE PROTECTION AGREEMENT" means any arrangement with any
other Person whereby, directly or indirectly, such Person is entitled to receive
from time to time periodic payments calculated by applying either a floating or
a fixed rate of interest on a stated notional amount in exchange for periodic
payments made by such Person calculated by applying a fixed or a floating rate
of interest on the same notional amount and shall include, without limitation,
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interest rate swaps, caps, floors, collars and similar agreements; PROVIDED that
any arrangement which is entered into by the Company or any of its Restricted
Subsidiaries in connection with Debt Incurred by the Company or any of its
Restricted Subsidiaries shall constitute Permitted Debt.
"INVESTMENT" means, with respect to any Person, any direct or indirect
loan or other extension of credit or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition by
such Person of any Capital Stock, bonds, notes, debentures or other securities
or evidences of Debt issued by, any other Person. "Investments" shall exclude
extensions of trade credit by the Company and its Subsidiaries in the ordinary
course of business in accordance with normal trade practices of the Company or
such Subsidiary, as the case may be.
"ISSUE DATE" means the first date on which the Series B Securities were
issued hereunder.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
assignment (including any assignment of rights to receive payments of money
other than in connection with mortgage banking operations in the ordinary course
of business), charge, security interest or encumbrance of any kind (including
any conditional sale or other title retention agreement or any lease in the
nature thereof) in respect of such asset and any agreement to grant to any
Person any such Lien and any sale and leaseback of any asset.
"MATERIAL SUBSIDIARY" means any Restricted Subsidiary of the Company
which accounted for 10 percent or more of the Consolidated Tangible Assets or
EBITDA of the Company for the fiscal year ending immediately prior to any
Default or Event of Default.
"MORTGAGE" means a first priority mortgage or first priority deed of
trust on improved real property.
"MORTGAGE DEBT" means such mortgage banking debt as would be listed on
the consolidated balance sheet of the Company prepared in accordance with
generally accepted accounting principles.
"NET PROCEEDS" with respect to any Asset Sale means (i) cash (in U.S.
dollars or freely convertible into U.S. dollars) received by the Company or any
of its Restricted Subsidiaries from such Asset Sale (including cash received as
consideration for the assumption or incurrence of liabilities incurred in
connection with or in anticipation of such Asset Sale), after (a) provision for
all income or other taxes measured by or resulting from such Asset Sale to the
Company or any of its Restricted Subsidiaries, whether or not offset by net
operating loss and tax credit carry-forwards, (b) payment of all brokerage
commissions and the underwriting fees and, without limitation, all other fees
and expenses related to such Asset Sale, and (c) deduction of appropriate
amounts to be provided by the Company or any of its Restricted Subsidiaries as a
reserve, in accordance with generally accepted accounting principles, against
any liabilities associated with
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the assets sold or otherwise disposed of in such Asset Sale (including, without
limitation, pension and other post-employment benefit liabilities and
liabilities related to environmental matters) or against any indemnification
obligations associated with the sale or other disposition of the assets sold or
otherwise disposed of in such Asset Sale, and (ii) all noncash consideration
received by the Company or any of its Restricted Subsidiaries from such Asset
Sale upon the liquidation or conversion of such consideration into cash.
"NET WORTH" of the Company means, at any date, the aggregate of
capital, surplus and retained earnings of the Company and its Restricted
Subsidiaries as would be shown on a consolidated balance sheet of the Company
prepared in accordance with generally accepted accounting principles, adjusted
to exclude (to the extent included) investments by the Company and its
Subsidiaries in joint ventures and the amount of equity attributable to
Affiliates other than Restricted Subsidiaries of such Person.
"NON-RECOURSE DEBT" with respect to any Person means Debt of such
Person for which the sole legal recourse for collection of principal and
interest on such Debt is against the specific property identified in the
instruments evidencing or securing such Debt and such property was acquired with
the proceeds of such Debt or such Debt was Incurred within 90 days after the
acquisition of such property.
"OFFICER" means the Chief Executive Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company or any Guarantor, as
applicable.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer or an assistant Secretary of the
Company or any Guarantor, as applicable.
"OPINION OF COUNSEL" means a written opinion from legal counsel who may
be an employee of or counsel for the Company or other counsel reasonably
acceptable to the Trustee.
"ORIGINAL SECURITIES" has the meaning set forth in Section 2.02.
"PERMITTED DEBT" means:
(a) Debt evidenced by the Original Securities, the Guarantees of the
Original Securities, the Existing Senior Notes and the Existing Guarantees, and
any Series C Securities and Guarantees thereof issued in exchange for the
foregoing;
(b) Debt Incurred by the Company or any Guarantor under or in respect
of a Bank Facility (including any guarantees related thereto) for working
capital or other corporate purposes or evidenced by letters of credit; PROVIDED
that the aggregate amount of all such Debt outstanding at any time pursuant to
this clause (b) may not exceed $140,000,000;
(c) Debt Incurred by the Company or any Guarantor under or in respect
of a Warehouse Facility; PROVIDED that the amount of such Debt (including
funding drafts issued thereunder) outstanding at any time pursuant to this
clause (c) guaranteed by the Company or a
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Restricted Subsidiary may not exceed the value of the Mortgages pledged to
secure Debt thereunder;
(d) Debt of the Company to any Guarantor or of any Restricted
Subsidiaries of the Company to the Company or to any Guarantor;
(e) Existing Debt (without duplication of Debt indicated under clauses
(a)-(d) above) of the Company and its Restricted Subsidiaries other than Debt to
be repaid from the proceeds of the sale of the Securities;
(f) Non-Recourse Debt;
(g) Debt in respect of performance, completion, guarantee, surety and
similar bonds or banker's acceptances provided by the Company or any of its
Restricted Subsidiaries in the ordinary course of business;
(h) Additional Debt of the Company or any Guarantor in an amount not to
exceed $7,500,000 at any time outstanding;
(i) Debt referred to in the definition of Interest Rate Protection
Agreement;
(j) Purchase Money Obligations incurred in the ordinary course of
business in an amount not exceeding $5,000,000 at any time outstanding; and
(k) Refinancing Debt.
"PERMITTED HOLDERS" means Alec Englestein and Harry Englestein and
their respective estates, affiliates and associates (as such terms are defined
in the Securities Act).
"PERMITTED INVESTMENTS" of any Person means Investments of such Person
in (i) direct obligations of the United States or any agency thereof or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within 180 days of the date of acquisition thereof, (ii) certificates
of deposit maturing within 180 days of the date of acquisition thereof issued by
a bank, trust company or savings and loan association which is organized under
the laws of the United States or any state thereof having capital, surplus and
undivided profits aggregating in excess of $250 million and a Keefe Bank Watch
Rating of C or better, (iii) certificates of deposit maturing within 180 days of
the date of acquisition thereof issued by a bank, trust company or savings and
loan association organized under the laws of the United States or any state
thereof other than banks, trust companies or savings and loan associations
satisfying the criteria in (ii) above; PROVIDED that the aggregate amount of all
certificates of deposit issued to the Company at any one time by any one such
bank, trust company or savings and loan association will not exceed $100,000,
(iv) commercial paper given the highest rating by two established national
credit rating agencies and maturing not more than 180 days from the date of the
acquisition thereof, (v) repurchase agreements or money-market accounts which
are
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fully secured by direct obligations of the United States or any agency thereof
and (vi) in the case of the Company and its Subsidiaries, (1) any receivables or
loans taken by the Company or a Subsidiary in connection with the sale of any
asset otherwise permitted by this Indenture, (2) Investments in any Guarantor,
(3) Investments in the Securities or Debt PARI PASSU with the Securities, (4)
Investments in evidences of Debt, securities or other property received from
another Person by the Company or any of its Restricted Subsidiaries in
connection with any bankruptcy proceeding or by reason of a composition or
readjustment of debt or a reorganization of such Person or as a result of
foreclosure, perfection or enforcement of any Lien in exchange for evidences of
Debt, securities or other property of such Person held by the Company or any of
its Restricted Subsidiaries, or for other liabilities or obligations of such
other Person to the Company or any of its Restricted Subsidiaries that were
created, in accordance with the terms of this Indenture, (5) Investments in
Interest Rate Protection Agreements which constitute Permitted Debt, (6)
Investments in any Homebuilding Joint Ventures not in excess of $20 million in
the aggregate for all Homebuilding Joint Ventures and (7) Investments in an
aggregate amount outstanding not greater than $5,000,000.
"PERMITTED LIENS" with respect to the Company and its Restricted
Subsidiaries means (i) (x) until such time as the Company shall have less than
an aggregate of $40,000,000 of maximum availability under one or more Bank
Facilities described under clause (b) of the definition of "Permitted Debt"
which are secured by any Liens, Liens securing the Company's Bank Facility or
Bank Facilities described under clause (b) of the definition of "Permitted
Debt", and (y) from and after the first time at which the Company shall have
less than an aggregate of $40,000,000 of maximum availability under one or more
Bank Facilities which are secured by Liens, Liens on assets of the Company or
any Restricted Subsidiary of the Company securing Debt which may be incurred
pursuant to Section 4.10, PROVIDED that the aggregate amount of Debt secured by
Liens (excluding Nonrecourse Debt of the Company and Restricted Subsidiaries and
Debt outstanding under the Warehouse Facility) may not exceed 40 percent of the
Company's Consolidated Tangible Assets; (ii) Liens securing a Warehouse
Facility, PROVIDED that such Liens shall not extend to any assets other than the
mortgages, promissory notes and other collateral that secures mortgage loans
made by the Company or any of its Restricted Subsidiaries; (iii) Liens securing
Non-Recourse Debt of the Company or any of its Restricted Subsidiaries, PROVIDED
that such Liens apply only to the property financed out of the net proceeds of
such Non-Recourse Debt within 90 days of the Incurrence of such Non-Recourse
Debt; (iv) Liens securing Debt of a Person existing at the time that such Person
is merged into or consolidated with the Company or a Restricted Subsidiary,
PROVIDED that such Liens were not created in contemplation of such merger or
consolidation and do not extend to any assets or property of the Company or any
Restricted Subsidiary, other than the surviving Person and its Subsidiaries; (v)
Liens on assets or property acquired by the Company or a Restricted Subsidiary,
PROVIDED that such Liens were not created in contemplation of such acquisition
and do not extend to any other assets or property (other than proceeds of such
acquired assets or property); (vi) Liens in respect of Interest Rate Protection
Agreements which constitute Permitted Debt; (vii) Liens for taxes, assessments
or governmental charges or claims that either (a) are not yet delinquent or (b)
are being contested in good faith by appropriate proceedings and as to which
appropriate reserves have been established or other provisions have been made in
accordance
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with generally accepted accounting principles; (viii) statutory Liens of
landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's, contractors' or other Liens imposed by law and arising in the
ordinary course of business; (ix) 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; (x)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds, progress payments,
government contracts and other obligations of like nature (exclusive of
obligations for the payment of borrowed money), in each case, incurred in the
ordinary course of business; (xi) attachment or judgment Liens not giving rise
to a Default or Event of Default; (xii) easements, rights-of-way, restrictions
and other similar charges or encumbrances not materially interfering with the
ordinary conduct of the business of the Company or any of its Restricted
Subsidiaries; (xiii) leases or subleases granted to others not materially
interfering with the ordinary conduct of the business of the Company or any of
its Restricted Subsidiaries; (xiv) Liens securing Refinancing Debt; PROVIDED
that such Liens only extend to the assets securing the Debt being refinanced,
such refinanced Debt was previously secured and such Liens do not extend to any
other assets of the Company or the assets of any of the Company's other
Subsidiaries; (xv) Liens securing Purchase Money Obligations (including
capitalized lease obligations); (xvi) Liens existing on February 2, 1998; (xvii)
any contract to sell an asset provided such sale is otherwise permitted under
this Indenture; and (xviii) Liens on property or assets of any Restricted
Subsidiary securing Debt of such Restricted Subsidiary owing to the Company or
one or more Restricted Subsidiaries of the Company.
"PERSON" means any individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or agency or instrumentality thereof.
"PHYSICAL SECURITIES" has the meaning set forth in Section 2.01.
"PREFERRED STOCK" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated) of
such Person's preferred or preference stock whether outstanding on or issued
after February 2, 1998, and including, without limitation, all classes and
series of preferred or preference stock.
"PRINCIPAL" of a debt security means the principal of the security plus
the premium, if any, on the security.
"PRIVATE EXCHANGE NOTE" has the meaning set forth in the Registration
Rights Agreement.
"PRIVATE PLACEMENT LEGEND" means the legend initially set forth on the
Series A Securities in the form set forth on Exhibit A-1.
"PURCHASE MONEY OBLIGATIONS" means Debt of any Person secured by Liens
(i) on property purchased, acquired, or constructed by such Person or its
Subsidiaries after the Issue
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Date and used in the ordinary course of business by such Person and (ii)
securing the payment of all or any part of the purchase price or construction
cost of such assets and limited to the property so acquired and improvements
thereof; PROVIDED that such Debt is incurred no later than 90 days after the
acquisition of such property or completion of such construction or improvements.
"QUALIFIED INSTITUTIONAL BUYER" or "QIB" has the meaning specified in
Rule 144A.
"REDEEMABLE STOCK" means, with respect to any Person, any class or
series of Capital Stock of such Person that is redeemable at the option of the
holder (except pursuant to a change in control provision that does not (i) cause
such Capital Stock to become redeemable in circumstances which would not
constitute a Change of Control and (ii) require the Company to pay the
redemption price therefor prior to the Change of Control Repurchase Date) or is
subject to mandatory redemption or otherwise matures prior to the final stated
maturity of the Securities .
"REFINANCING DEBT" means Debt that refunds, refinances or extends any
Securities, Existing Senior Notes, Existing Debt (other than Existing Debt to be
repaid with the net proceeds of the offering of the Securities) or other Debt
Incurred by the Company or its Restricted Subsidiaries permitted under the terms
of this Indenture, but only to the extent that (i) the Refinancing Debt is
subordinated to the Securities to the same extent as the Debt being refunded,
refinanced or extended, if at all, (ii) the Refinancing Debt is scheduled to
mature either (a) no earlier than the Debt being refunded, refinanced or
extended, or (b) after the maturity date of the Securities, (iii) the portion,
if any, of the Refinancing Debt that is scheduled to mature on or prior to the
maturity date of the Securities has a Weighted Average Life to Maturity at the
time such Refinancing Debt is Incurred that is equal to or greater than the
Weighted Average Life to Maturity of the portion of the Debt being refunded,
refinanced or extended that is scheduled to mature on or prior to the maturity
date of the Securities, and (iv) the gross proceeds of such Refinancing Debt are
an amount that is equal to or 1ess than the aggregate principal amount then
outstanding under the Debt being refunded, refinanced or extended (plus the
premium or other payments paid in connection therewith (which shall not exceed
the stated amount of any premium or other payment required to be paid in
connection with such a renewal, extension, substitution, refunding, refinancing,
redemption, repurchase or replacement pursuant to the terms of the Debt being
renewed, extended, substituted, refunded, refinanced, amended, modified,
supplemented, redeemed, repurchased or replaced) and the expenses incurred in
connection therewith).
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
by and among the Company, the Guarantors named therein and the Initial
Purchaser, relating to the Securities and dated as of the Issue Date (or a later
date on which Series B Securities other than the Original Securities are
issued), as the same may be amended, supplemented or modified from time to time
in accordance with the terms thereof.
"RESALE RESTRICTION TERMINATION DATE" has the meaning provided in
Section 2.15(a).
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"RESTRICTED PAYMENTS" means with respect to the Company or any
Restricted Subsidiary (i) the declaration or payment of any dividend or other
distribution on any shares of such Person's Capital Stock (except (x) dividends
or distributions in additional shares of Capital Stock of the Company other than
Redeemable Stock or (y) the declaration or payment of any dividend or other
distribution by a Restricted Subsidiary to the Company or another Restricted
Subsidiary), (ii) any payment on account of the purchase, redemption or other
acquisition of (a) any shares of such Person's Capital Stock or (b) any option,
warrant or other right to acquire shares of such Person's Capital Stock, except,
in each case, Capital Stock held by the Company or a Restricted Subsidiary,
(iii) any Investment (other than a Permitted Investment) in any Person, or (iv)
any principal payment, redemption, repurchase, defeasance or other acquisition
or retirement, prior to scheduled principal payment or scheduled maturity, of
Subordinated Debt of the Company or its Subsidiaries.
"RESTRICTED SECURITY" has the meaning set forth in Rule 144(a)(3) under
the Securities Act and includes, without limitation, any Private Exchange Note;
PROVIDED that the Trustee shall be entitled to request and conclusively rely
upon an Opinion of Counsel with respect to whether any Security is a Restricted
Security.
"RESTRICTED SUBSIDIARY" means any Subsidiary which is not an
Unrestricted Subsidiary.
"RULE 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means the Series B Securities and Series C Securities as
amended or supplemented from time to time in accordance with the terms hereof
that are issued pursuant to this Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SERIES B SECURITIES" means the 9 1/4% Series B Senior Notes due
February 1, 2008, being issued and sold under this Indenture.
"SERIES C SECURITIES" means the 9 1/4% Series C Senior Notes due
February 1, 2008 (the terms of which are identical to the Series B Securities
except that the Series C Securities shall be registered under the Securities
Act, and shall not contain the restrictive legend on the face of the form of the
Series B Securities), to be issued in exchange for the Series B Securities and
the Existing Senior Notes under this Indenture.
"SUBORDINATED DEBT" means, with respect to the Company and its
Restricted Subsidiaries, all Debt of such Person which is, pursuant to its
terms, expressly subordinated in right of payment to the Securities or the
Guarantees (other than Debt held by the Company or a Restricted Subsidiary).
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"SUBSIDIARY" means, with respect to any Person, (i) any corporation or
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 by such Person or one or
more of the other Subsidiaries of that Person or (ii) any partnership or joint
venture at least a majority of the voting power of which is at the time directly
or indirectly owned by such Person or one or more of the other Subsidiaries of
that Person, or a combination thereof or a successor thereto.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture, except as provided in
Section 9.03.
"TRUST OFFICER" means any officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"TRUSTEE" means the party named as such in this Indenture until a
successor replaces it and thereafter means the successor.
"UNRESTRICTED SUBSIDIARY" means each of the Subsidiaries of the Company
(other than a Guarantor) so designated by a resolution adopted by the board of
directors of the Company as provided below; PROVIDED that (a) neither the
Company nor any of its other Subsidiaries (other than Unrestricted Subsidiaries)
(1) provides any direct or indirect credit support for any Debt of such
Subsidiary (including any undertaking, agreement or instrument evidencing such
Debt) or (2) is directly or indirectly liable for any Debt of such Subsidiary,
and (b) the creditors with respect to Debt for borrowed money of such Subsidiary
have agreed in writing that they have no recourse, direct or indirect, to the
Company or any other Subsidiary of the Company (other than Unrestricted
Subsidiaries), including, without limitation, recourse with respect to the
payment of principal or interest on any Debt of such Subsidiary. The board of
directors of the Company may designate an Unrestricted Subsidiary to be a
Restricted Subsidiary; PROVIDED that (i) any such redesignation will be deemed
to be an Incurrence by the Company and its Restricted Subsidiaries of the Debt
(if any) of such redesignated Subsidiary for purposes of Section 4.10 hereof as
of the date of such redesignation, (ii) any Debt of such Unrestricted Subsidiary
could then be Incurred in accordance with Section 4.10 on the date of such
redesignation and (iii) the Liens of such Unrestricted Subsidiary could then be
incurred in accordance with Section 4.13 hereof as of the date of such
redesignation. Subject to the foregoing, the board of directors of the Company
also may designate any Restricted Subsidiary to be an Unrestricted Subsidiary;
PROVIDED that (i) all previous Investments by the Company and its Restricted
Subsidiaries in such Restricted Subsidiary (net of any returns previously paid
on such Investments) will be deemed to be Restricted Payments at the time of
such designation and will reduce the amount available for Restricted Payments
under Section 4.11 hereof, (ii) the Company and its Restricted Subsidiaries
could incur $1.00 of additional Indebtedness under the Coverage Ratio test
contained in Section 4.10 hereof and (iii) no Default or Event of Default shall
have occurred or be continuing. Any such designation or redesignation by the
board of directors of the Company will be evidenced to the Trustee by the filing
with the Trustee of a certified copy of the resolution of the board of
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directors of the Company 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.
"U.S. GOVERNMENT OBLIGATIONS" means direct noncallable obligations of,
or non-callable obligations guaranteed by, the United States of America for the
payment of which the full faith and credit of the United States of America is
pledged.
"VOTING STOCK" means, with respect to any Person, Capital Stock of any
class or kind normally entitled to vote in the election of the board of
directors or other governing body of such Person.
"WAREHOUSE FACILITY" means a Bank Facility to finance the making of
mortgage loans originated by the Company or any of its Subsidiaries.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Debt or
portion thereof, if applicable, at any date, the number of years obtained by
dividing (i) the then outstanding principal amount of such Debt or portion
thereof, if applicable, into (ii) 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 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.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means any Restricted Subsidiary of
the Company of which 100% of the outstanding Capital Stock is owned by one or
more Wholly Owned Restricted Subsidiaries of the Company or by the Company and
one or more Wholly Owned Restricted Subsidiaries of the Company. For purposes of
this definition, any directors' qualifying shares shall be disregarded in
determining the ownership of a Subsidiary.
SECTION 1.02. OTHER DEFINITIONS
TERM DEFINED IN SECTION
- ---- ------------------
"Bankruptcy Law"................................................ 6.01
"business day".................................................. 11.07
"Change of Control Notice"...................................... 4.08
"Change of Control Repurchase Date"............................. 4.08
"Change of Control Repurchase Right"............................ 4.08
"Custodian"..................................................... 6.01
"Discharged".................................................... 8.01
"Event of Default".............................................. 6.01
"Incur"......................................................... 4.10
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TERM DEFINED IN SECTION
- ---- ------------------
"Legal Holiday"................................................. 11.07
"Minimum Net Worth"............................................. 4.09
"Net Proceeds Offer"............................................ 4.15
"Net Worth"..................................................... 4.09
"Net Worth Offer Amount"........................................ 4.09
"Net Worth Price"............................................... 4.09
"Net Worth Repurchase Date"..................................... 4.09
"Net Worth Repurchase Right".................................... 4.09
"Paying Agent".................................................. 2.03
"Purchase Amount"............................................... 4.15
"Registrar"..................................................... 2.03
"Successor"..................................................... 5.01
"Trigger Date".................................................. 4.09
.ECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC Rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
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(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in effect on the date hereof;
(3) "or" is NOT exclusive;
(4) words in the singular include the plural and in the plural
include the singular;
(5) provisions apply to successive events and transactions;
and
(6) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other Subdivision.
ARTICLE 2
THE SECURITIES
SECTION 2.01. FORM AND DATING
The Series B Securities and Series C Securities, including the
Trustee's certificate of authentication, shall be substantially in the form set
forth in Exhibits A-1 and A-2, respectively, which is incorporated in and forms
a part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Security shall
be dated the date of its authentication.
The terms and provisions contained in the Securities and the Guarantees
shall constitute, and are hereby expressly made, a part of this Indenture. The
Series B Securities and the Series C Securities shall be considered collectively
to be a single class for all purposes of this Indenture, including, without
limitation, waivers, amendments, redemptions and offers to purchase.
Series B Securities offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent Global Securities in
registered form, substantially in the form set forth in Exhibit A-l ("Global
Securities"), deposited with the Trustee, as custodian for the Depository, and
shall bear the legend set forth on Exhibit B. Series C Securities (other than
any constituting Private Exchange Notes) shall be issued initially in the form
of one or more permanent Global Securities in registered form, substantially in
the form set forth in Exhibit A-2, deposited with the Trustee, as custodian for
the Depositary, and shall bear the legend set forth on Exhibit B. The aggregate
principal amount of any Global Security may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided.
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Series B Securities offered and sold in reliance on any other exemption
from registration under the Securities Act other than as described in the
preceding paragraph and any Series C Securities constituting Private Exchange
Notes shall be issued in the form of certificated Securities in registered form
in substantially the form set forth in Exhibit A-l and Exhibit A-2, respectively
(the "Physical Securities").
SECTION 2.02. EXECUTION AND AUTHENTICATION
One Officer shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Securities.
If the Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication; and the Trustee shall, upon a written order or
orders of the Company signed by two Officers or by an Officer and an Assistant
Treasurer or Assistant Secretary of the Company, authenticate and make
available, for delivery such Securities. The order shall specify the amount of
Securities to be authenticated and the date on which such Securities are to be
authenticated.
The Trustee shall authenticate (i) Series B Securities for original
issue on the Issue Date in the aggregate principal amount of $50,000,000 (the
"Original Securities"), (ii) Series B Securities for original issue after the
Issue Date in such additional principal amounts as may be set forth in an
Officers' Certificate described as follows and (iii) Series C Securities from
time to time for issue only (a) in exchange for a like principal amount of
Series B Securities or (b) in exchange for a like principal amount of Existing
Senior Notes, in each case upon receipt of a written order of the Company in the
form of an Officers' Certificate. The Officers' Certificate shall specify the
amount of Securities to be authenticated, the series and type of Securities, the
date on which the Securities are to be authenticated and the date from which
interest on such Securities shall accrue. The aggregate principal amount of
Securities outstanding at any time may not exceed $50,000,000 plus any
additional principal amount issued pursuant to item (ii) or item (iii)(b) of the
first sentence of this paragraph, except as provided in Section 2.07. Upon
receipt of a written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes
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authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. REGISTRAR AND PAYING AGENT
The Company shall maintain in the Borough of Manhattan, The City of New
York, an office or agency where Securities may be presented for registration of
transfer or for exchange ("Registrar") and an office or agency where Securities
may be presented for payment ("Paying Agent"); provided that payment of interest
may, at the option of the Company, be made by check mailed to a Holder at his
registered address. The Registrar shall keep a register of the Securities and of
their transfer and exchange. The Company may appoint or change one or more
co-Registrars and one or more additional paying agents without notice and may
act in any such capacity on its own behalf. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee of the name and address of any Agent not a party to this Indenture.
If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall
act as such, and shall be entitled to appropriate compensation therefor pursuant
to Section 7.07.
The Company initially appoints the Trustee as Paying Agent and
Registrar.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST
Each Paying Agent shall hold in trust for the benefit of the
Securityholders or the Trustee all moneys held by such Paying Agent for the
payment of principal of or interest on the Securities, and shall notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, such
Paying Agent shall have no further liability for the money. If the Company acts
as Paying Agent, it shall segregate and hold as a separate trust fund all money
held by it as Paying Agent.
SECTION 2.05. SECURITYHOLDER LISTS
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or before each interest payment date and at such other times
as the Trustee may request in writing a list, in such form and as of such date
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as the Trustee may reasonably require, of the names, addresses and tax
identification numbers of Securityholders.
SECTION 2.06. TRANSFER AND EXCHANGE
Where Securities are presented to the Registrar or a co-Registrar with
a request to register the transfer or to exchange them for an equal principal
amount of Securities of other authorized denominations, the Registrar shall
register the transfer or make the exchange if the requirements of Section
8-401(1) of the New York Uniform Commercial Code are met. To permit
registrations of transfer and exchanges, the Trustee shall authenticate
Securities at the Registrar's request. The Company or the Trustee, as the case
may be, shall not be required (a) to issue, authenticate, register the transfer
of or exchange any Security during a period beginning at the opening of business
15 days before the mailing of a notice, of redemption of the Securities selected
for redemption under Section 3.02 and ending at the close of business on the day
of such mailing, or (b) to register the transfer of or exchange any Security so
selected for redemption in whole or in part, except the unredeemed portion of
Securities being redeemed in part.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any transfer, registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 2.10, 3.06 or 9.05 not involving any
transfer.
Any Holder of the Global Security shall, by acceptance of such Global
Security, agree that, subject to Section 2.15(d), transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Depository (or its agent), and that ownership of a
beneficial interest in the Global Security shall be required to be reflected in
a book entry.
SECTION 2.07. REPLACEMENT SECURITIES
If the Holder of a Security claims that the Security has been
mutilated, lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security if the requirements of Section
8-405 of the New York Uniform Commercial Code are met and, in the case of a
mutilated Security, such mutilated Security is surrendered to the Trustee. If
required by the Trustee or the Company, an indemnity bond must be sufficient, in
the judgment of both, to protect the Company, the Trustee, or any Agent from any
loss which any of them may suffer if a Security is replaced. The Company or the
Trustee may charge for its expenses in replacing a Security.
In case any such mutilated, destroyed or wrongfully taken Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security when due.
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Every replacement Security is an additional obligation of the Company.
SECTION 2.08. OUTSTANDING SECURITIES
Securities outstanding at any time are all the Securities authenticated
by the Trustee except for those canceled by it, those delivered to it for
cancellation and those described in this Section as not outstanding. A Security
does not cease to be outstanding because the Company or one of its subsidiaries
or Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it, or a court
holds, that the replaced Security is held by a BONA FIDE purchaser.
If the Paying Agent (other than the Company) holds on a redemption
date, repurchase date or maturity date money sufficient to pay Securities
payable on that date, then on and after that date, such Securities shall be
deemed to be no longer outstanding and interest on them shall cease to accrue.
SECTION 2.09. SECURITIES HELD BY THE COMPANY OR AN AFFILIATE
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or a Subsidiary or an Affiliate shall be disregarded, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which the
Trustee actually knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY SECURITIES
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities.
SECTION 2.11. CANCELLATION
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration of
transfer, exchange, payment or cancellation and may destroy canceled Securities
and deliver a certificate of any such destruction to the Company. The Company
may not issue new Securities to replace Securities that it has paid or delivered
to the Trustee for cancellation.
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SECTION 2.12. DEFAULTED INTEREST
If and to the extent the Company defaults in a payment of interest on
the Securities, it shall pay the defaulted interest in any lawful manner plus,
to the extent not prohibited by applicable statute or case law, interest payable
on the defaulted interest as provided in Section 4.01. It may pay the defaulted
interest to the persons who are Securityholders on a subsequent special record
date in which case such interest shall cease to be payable to the persons who
were Securityholders on the regular record date. The Company shall fix such
special record date and payment date. At least 15 days before the special record
date, the Company shall mail to Securityholders a notice that states the special
record date, payment date and amount of interest to be paid.
SECTION 2.13. CUSIP NUMBER
The Company in issuing each series of the Securities will use a "CUSIP"
number, and if so, the Trustee shall use the CUSIP number in notices of
redemption or exchange as a convenience to Holders; PROVIDED that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Securities, and
that reliance may be placed only on the other identification numbers printed on
the Securities. The Company shall promptly notify the Trustee of any such CUSIP
number used by the Company in connection with the Securities and any change in
such CUSIP number.
SECTION 2.14. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES
(a) The Global Securities initially shall (i) be registered in the name
of the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit B.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Security, and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Security.
(b) Global Securities may be transferred as a whole, and interests of
beneficial owners in Global Securities may be transferred or exchanged for
Physical Securities, only in accordance with the rules and procedures of the
Depository and the provisions of Section 2.15. In addition, Physical Securities
shall be transferred to all beneficial owners in exchange for their beneficial
interests in Global Securities if (i) the Depository notifies the Company that
it is unwilling or unable to continue as Depository for any Global Security and
a successor depositary is not
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appointed by the Company within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Registrar has received a request
from the Depository to issue Physical Securities.
(c) In connection with the transfer of Global Securities as an entirety
to beneficial owners pursuant to paragraph (b), the Global Securities shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
the Global Securities, an equal aggregate principal amount of Physical
Securities of authorized denominations.
(d) Any Physical Security constituting a Restricted Security delivered
in exchange for an interest in a Global Security pursuant to paragraph (b) or
(c) of this Section shall, except as otherwise provided by Section 2.15, bear
the legend regarding transfer restrictions applicable to the Physical Securities
set forth in Exhibit A-l.
(e) The Holder of any Global Security may grant proxies and otherwise
authorize any person, including Agent Members and persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
SECTION 2.15. REGISTRATION OF TRANSFERS AND EXCHANGES
(a) TRANSFER AND EXCHANGE OF PHYSICAL SECURITIES. When Physical
Securities are presented to the Registrar with a request:
(i) to register the transfer of the Physical Securities;
or
(ii) to exchange such Physical Securities for an equal
number of Physical Securities of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
the requirements under this Section 2.15 for such transactions are met;
PROVIDED, HOWEVER, that the Physical Securities presented or surrendered for
registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the
Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly
authorized in writing; and
(II) in the case of Physical Securities the offer and sale
of which have not been registered under the
Securities Act and are presented for transfer or
exchange prior to (x) the date which is two years
after the later of the date of original issue and the
last date on which the Company or any affiliate of
the Company was the owner of such Security, or any
predecessor thereto
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and (y) such later date, if any, as may be required
by any subsequent change in applicable law (the
"Resale Restriction Termination Date"), such Physical
Securities shall be accompanied, in the sole
discretion of the Company, by the following
additional information and documents, as applicable:
(A) if such Physical Security is being delivered
to the Registrar by a Holder for
registration in the name of such Holder,
without transfer, a certification from such
Holder to that effect (in substantially the
form of Exhibit C hereto); or
(B) if such Physical Security is being
transferred to a qualified institutional
buyer (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A
under the Securities Act or pursuant to an
exemption from registration in accordance
with Rule 144 under the Securities Act, a
certification to that effect (in
substantially the form of Exhibit C hereto);
or
(C) if such Physical Security is being
transferred to an institutional "accredited
investor" within the meaning of subparagraph
(a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501
under the Securities Act, delivery of a
Certificate of Transfer in the form of
Exhibit D hereto and an opinion of counsel
and/or other information satisfactory to the
Company to the effect that such transfer is
in compliance with the Securities Act; or
(D) if such Physical Security is being
transferred in reliance on another exemption
from the registration requirements of the
Securities Act, a certification to that
effect (in substantially the form of Exhibit
C hereto) and an opinion of counsel
reasonably acceptable to the Company to the
effect that such transfer is in compliance
with the Securities Act.
(b) RESTRICTIONS ON TRANSFER OF A PHYSICAL SECURITY FOR A BENEFICIAL
INTEREST IN A GLOBAL Security. A Physical Security may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar of a Physical
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Registrar, together with:
(A) certification, substantially in the form of
Exhibit C hereto, that such Security is
being transferred to a qualified
institutional buyer (as defined in Rule 144A
under the Securities Act) in accordance with
Rule 144A under the Securities Act; and
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(B) written instructions directing the Registrar
to make, or to direct the Depositary to
make, an endorsement on the Global Security
to reflect an increase in the aggregate
amount of the Securities represented by the
Global Security,
then the Registrar shall cancel such Physical Security and cause, or direct the
Depositary to cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Registrar, the number of Securities
represented by the Global Security to be increased accordingly. If no Global
Security is then outstanding, the Company shall issue and the Registrar shall
authenticate a new Global Security in the appropriate amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL SECURITIES. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL SECURITY FOR A
PHYSICAL SECURITY.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial
interest for a Physical Security. Upon receipt by the
Registrar of written instructions or such other form
of instructions as is customary for the Depositary
from the Depositary or its nominee on behalf of any
Person having a beneficial interest in a Global
Security and upon receipt by the Registrar of a
written order or such other form of instructions as
is customary for the Depositary or the Person
designated by the Depositary as having such a
beneficial interest containing registration
instructions and, in the case of any such transfer or
exchange prior to the Resale Restriction Termination
Date, the following additional information and
documents:
(A) if such beneficial interest is being
transferred to the Person designated by the
Depositary as being the beneficial owner, a
certification from such Person to that
effect (in substantially the form of Exhibit
C hereto); or
(B) if such beneficial interest is being
transferred to a qualified institutional
buyer (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A
under the Securities Act or pursuant to an
exemption from registration in accordance
with Rule 144 under the Securities Act, a
certification to that effect from the
transferee or transferor (in substantially
the form of Exhibit C hereto); or
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(C) if such beneficial interest is being
transferred to an institutional "accredited
investor" within the meaning of subparagraph
(a)(l), (a)(2), (a)(3) or (a)(7) of Rule 501
under the Securities Act, delivery of a
Certificate of Transfer in the form of
Exhibit D hereto and an opinion of counsel
and/or other information satisfactory to the
Company to the effect that such transfer is
in compliance with the Securities Act; or
(D) if such beneficial interest is being
transferred in reliance on another exemption
from the registration requirements of the
Securities Act, a certification to that
effect (in substantially the form of Exhibit
C hereto) and an opinion of counsel
reasonably acceptable to the Company to the
effect that such transfer is in compliance
with the Securities Act,
then the Registrar will cause, in accordance with the
standing instructions and procedures existing between
the Depositary and the Registrar, the aggregate
amount of the Global Security to be reduced and,
following such reduction, the Company will execute
and, upon receipt of an authentication order in the
form of an Officers' Certificate, the Registrar will
authenticate and deliver to the transferee a Physical
Security.
(ii) Physical Securities issued in exchange for a
beneficial interest in a Global Security pursuant to
this Section 2.15(d) shall be registered in such
names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct
or indirect participants or otherwise, shall instruct
the Registrar in writing. The Registrar shall deliver
such Physical Securities to the Persons in whose
names such Physical Securities are so registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL SECURITIES.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.15), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless, and the Trustee is hereby authorized to
deliver Securities without the Private Placement Legend only if, (i) the
circumstances contemplated by paragraph (a)(ii)(II) of this Section 2.15 exist,
(ii) there is delivered to the Registrar an Opinion of Counsel
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reasonably satisfactory to the Company and the Trustee to the effect that
neither such legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the Securities Act or (iii)
such Security has been sold pursuant to an effective registration statement
under the Securities Act.
(g) GENERAL. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of, and each beneficial interest in, such a
Security acknowledges the restrictions on transfer of such Security set forth in
this Indenture and in the Private Placement Legend and agrees that it will
transfer such Security only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.14 or this Section 2.15.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
ARTICLE 3
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE
If the Company wants to redeem a portion of the Securities pursuant to
paragraph 5 of the Securities, it shall notify the Trustee at least 60 days
prior to the redemption date (unless a shorter notice period shall be
satisfactory to the Trustee) of the redemption date and the principal amount of
Securities to be redeemed.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED
If less than all the Securities are to be redeemed, the Trustee shall
select the particular Securities (or portions thereof) to be redeemed on either
a pro rata basis or by lot or such other method as the Trustee shall determine
to be fair and appropriate, such determination to be final and conclusive for
all purposes hereunder, but in any event, in such manner as complies with
applicable legal and stock exchange requirements. The Trustee shall make the
selection from Securities outstanding not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. Securities and portions of them it
selects shall be in amounts of $1,000 or whole multiples of $1,000. Provisions
of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail by first-class mail a notice of redemption to each Holder
whose Securities are to be redeemed.
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The notice shall identify the Securities and the principal amount
thereof to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price (including the amount of accrued
interest to be paid on the Securities called for redemption);
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price; and
(5) that interest on Securities called for redemption ceases
to accrue on and after the redemption date.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event the
Company will provide the Trustee with the information required by clauses (1)
through (5).
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once a notice of redemption is mailed, Securities or portions thereof
called for redemption become due and payable on the redemption date at the
redemption price and, on and after such date (unless the Company shall default
in the payment of the redemption price), such Securities shall cease to bear
interest. Upon surrender to the Paying Agent, such Securities shall be paid at
the redemption price plus accrued interest to the redemption date.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
On or before 12:00 Noon on the redemption date, the Company shall
deposit with the Paying Agent money in funds immediately available on the
redemption date sufficient to pay the redemption price of and accrued interest
on all Securities to be redeemed on that date. The Paying Agent shall promptly
return to the Company any money deposited with it by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Securities to be redeemed.
SECTION 3.06. SECURITIES REDEEMED IN PART
Upon surrender of a Security that is redeemed in part, the Trustee
shall authenticate for the Holder a new Security equal in principal amount to
the unredeemed portion of the Security surrendered.
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ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities. Principal and
interest shall be considered paid on the date due if the Paying Agent holds as
of 12:00 Noon on that date money sufficient to pay all principal and interest
then due. The Paying Agent shall return to the Company, no later then five days
following the date of payment any money (including accrued interest) that
exceeds such amount of principal and interest payable on the Securities.
The Company shall pay interest on overdue principal at the rate borne
by the Securities. The Company shall pay interest on overdue installments of
interest at the same rate to the extent not prohibited by applicable statute or
case law.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY
The Company will maintain in the Borough of Manhattan, The City of New
York, an office or agency where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee
in the Borough of Manhattan, The City of New York, an agency of the Company in
accordance with Section 2.03.
SECTION 4.03. SEC REPORTS
So long as any of the Securities remain outstanding the Company shall
deliver to the Trustee and the Trustee will mail to each Holder within 15 days
after the Company files the same
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with the SEC copies of the quarterly and annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) with respect to the Company
and the Guarantors, if any, which the Company and the Guarantors may be required
to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. The
Company also shall comply with the other provisions of TIA ss. 314(a).
Notwithstanding that neither the Company nor any of the Guarantors may
be required to remain subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, for so long as any of the Securities remain
outstanding, the Company will continue to file with the SEC and provide the
Trustee and Holders with such annual and quarterly reports and such information,
documents and other reports with respect to the Company and the Guarantors as
are required under Sections 13 and 15(d) of the Exchange Act. If filing of
documents by the Company with the SEC as aforementioned in this paragraph is not
permitted under the Exchange Act, the Company shall promptly upon written notice
supply copies of such documents to any prospective holder.
SECTION 4.04. COMPLIANCE CERTIFICATE
The Company shall deliver to the Trustee within 120 days after the end
of each fiscal year of the Company an Officers' Certificate stating whether or
not the signatories know of any Default by the Company in performing any of its
obligations under this Indenture and the Securities. If they do know of any such
Default, the certificate shall describe the Default and its status.
SECTION 4.05. STAY, EXTENSION AND USURY LAWS
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 4.06. CORPORATE EXISTENCE
Subject to Article 5, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate existence of each of its Restricted Subsidiaries in
accordance with the respective organizational documents of each Restricted
Subsidiary and the rights (charter and statutory), licenses and franchises to
the Company and its Restricted Subsidiaries; PROVIDED, HOWEVER, that the Company
shall not be required to preserve any such right, license or franchise, or the
corporate existence of any
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Restricted Subsidiary if, in the judgment of the board of directors of the
Company, (i) such preservation or existence is not material to the conduct of
business of the Company and (ii) the loss of such right, license or franchise or
the dissolution of such Restricted Subsidiary does not have a material adverse
impact on the Holders.
SECTION 4.07. NOTICE OF DEFAULT
In the event that any Default under Section 6.01 hereof shall occur the
Company will give prompt written notice of such Default to the Trustee.
SECTION 4.08. CHANGE OF CONTROL
(a) In the event that there shall occur a Change of Control of the
Company, each Holder of a Security shall have the right (a "Change of Control
Repurchase Right") upon receipt of a Change of Control Notice (as defined
below), at such Holder's option, to require the Company to repurchase any
Securities of such Holder or any portion of the principal amount thereof which
is $1,000 or any integral multiple thereof, on the date (the "Change of Control
Repurchase Date") that is 45 days after the date of the Change of Control
Notice, or, if such 45th day is a Legal Holiday, the next subsequent day which
is not a Legal Holiday, at a price equal to 101% of the principal amount
thereof, plus accrued interest to the Change of Control Repurchase Date (the
"Change of Control Price"). The right to require the repurchase of Securities
shall not continue after a discharge of the Company from its obligations with
respect to the Securities in accordance with Article 8.
(b) Within 30 days after the occurrence of a Change of Control, the
Company, or, at the request of the Company, the Trustee, shall give notice of
the occurrence of the Change of Control and of the Change of Control Repurchase
Right set forth herein to each Holder (the "Change of Control Notice"). The
Company shall also deliver a copy of the Change of Control Notice to the
Trustee. Any such notice shall contain all instructions and materials necessary
to enable such Holders to deliver Securities pursuant to the Change of Control
Repurchase Right including, without limitation, the following:
(1) the Change of Control Repurchase Date;
(2) the date by which the Change of Control Repurchase Right
must be exercised;
(3) the Change of Control Price;
(4) that Securities are to be surrendered for payment of the
Change of Control Price; and
(5) that the exercise of the Change of Control Repurchase
Right is irrevocable.
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(c) To exercise a Change of Control Repurchase Right a Holder shall
deliver to the Company (if it is acting as its own Paying Agent) or to a Paying
Agent designated by the Company for such purpose in the notice referred to above
on or before the 30th day after the date of the Change of Control Notice, or, if
such day is a Legal Holiday, the next subsequent day which is not a Legal
Holiday, (i) written notice of the Holder's exercise of such right, which notice
shall set forth the name of the Holder, the principal amount of Securities (or
portions thereof) to be repurchased and a statement that an election to exercise
the Change of Control Repurchase Right is being made thereby, and (ii) the
Securities with respect to which the Change of Control Repurchase Right is being
exercised, duly endorsed for transfer to the Company, and the Holder of such
Securities shall be entitled to receive from the Company (if it is acting as its
own Paying Agent) or such Paying Agent a nontransferable receipt of deposit
evidencing such deposit. Such written notice shall be irrevocable.
If the Change of Control Repurchase Date is between a regular record
date for the payment of interest and the next succeeding interest payment date,
any Security to be repurchased must be accompanied by funds equal to the
interest payable on such succeeding interest payment date on the principal
amount to be repurchased (unless such Security shall have been called for
redemption, in which case no such payment shall be required), and the interest
on the principal amount of the Security being repurchased will be paid on such
next succeeding interest payment date to the registered holder of such Security
on the immediately preceding record date. A Security repurchased on an interest
payment date need not be accompanied by any payment, and the interest on the
principal amount of the Security being repurchased will be paid on such interest
payment date to the registered holder of such Security on the immediately
preceding record date.
(d) In the event a Change of Control Repurchase Right shall be
exercised in accordance with the terms hereof, the Company shall pay or cause to
be paid the applicable Change of Control Price with respect to the Securities as
to which the Change of Control Repurchase Right shall have been exercised to the
Holder on the Change of Control Repurchase Date.
(e) On or prior to a Change of Control Repurchase Date, the Company
shall deposit with the Trustee or with a Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust in accordance with
Section 2.04) an amount of money sufficient to pay the Change of Control Price
payable in respect of all of the Securities which are to be repurchased on that
date.
(f) Both the notice of the Company and the notice of the Holder having
been given as specified in this Section 4.08, the Securities so to be
repurchased shall, on the Change of Control Repurchase Date, become due and
payable at the Change of Control Price applicable thereto and from and after
such date (unless the Company shall default in the payment of the Change of
Control Price) such Securities shall cease to bear interest. If any Security
shall not be paid upon surrender thereof for repurchase, the principal shall,
until paid, bear interest from the Change of Control Repurchase Date at the rate
borne by such Security.
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(g) Any Security which is to be submitted for repurchase only in part
shall be delivered pursuant to this Section 4.08 (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and make available for delivery to
the Holder of such Security without any service charge, a new Security or
Securities, of any authorized denomination as requested by such Holder, of the
same tenor and in aggregate principal amount equal to and in exchange for the
portion of the principal of such Security not submitted for repurchase.
(h) If any repurchase pursuant to the foregoing provisions constitutes
a tender offer as defined under the Exchange Act, the Company will comply with
the requirements of Rule 14e-1 and any other tender offer rules under the
Exchange Act which then may be applicable.
SECTION 4.09. MAINTENANCE OF NET WORTH
(a) In the event that the Company's Net Worth at the end of each of any
two consecutive fiscal quarters (the last day of such second fiscal quarter
being referred to as the "Trigger Date") is less than $35,000,000 (the "Minimum
Net Worth"), then the Company shall make an offer to all Holders (a "Net Worth
Offer") to acquire on a pro rata basis on the date (the "Net Worth Repurchase
Date") that is 45 days following the date of the Net Worth Notice (as defined
below), Securities in an aggregate principal amount equal to 10% of the original
outstanding principal amount of the Securities (or if less than 10% of the
original aggregate principal amount of the Securities issued are then
outstanding, all the Securities outstanding at the time) (the "Net Worth Offer
Amount") at a purchase price of 100% of the principal amount thereof, plus
accrued interest to the Net Worth Repurchase Date (the "Net Worth Price"). The
Company may credit against the Net Worth Offer Amount the principal amount of
Securities acquired by the Company prior to the Trigger Date through purchase,
optional redemption or exchange The Company, however, may not credit a specific
Security in more than one Net Worth Offer. In no event shall the failure to meet
the Minimum Net Worth at the end of any fiscal quarter be counted toward the
making of more than one Net Worth Offer. The Company shall notify the Trustee
promptly after the occurrence of any of the events specified in this Section
4.09 and shall notify the Trustee in writing if its Net Worth is equal to or
less than the Minimum Net Worth for any fiscal quarter.
(b) Within 30 days after the Trigger Date, the Company, or, at the
request of the Company, the Trustee, shall give notice of the Net Worth Offer to
each Holder (the "Net Worth Notice"). The Company shall also deliver a copy of
the Net Worth Notice to the Trustee. Any such notice shall contain all
instructions and materials necessary to enable such Holders to deliver
Securities pursuant to the Net Worth Offer including, without limitation, the
following:
(1) the Net Worth Repurchase Date;
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(2) the date by which the Net Worth Offer must be accepted by
a Holder;
(3) the Net Worth Price and the Net Worth Offer Amount; and
(4) that Securities are to be surrendered for payment of the
Net Worth Price.
(c) To accept a Net Worth Offer a Holder shall deliver to the Company
(if it is acting as its own Paying Agent) or to a Paying Agent designated by the
Company for such purpose in the Net Worth Notice, on or before the 30th day
after the date of the Net Worth Notice, or, if such day is a Legal Holiday, the
next subsequent day which is not a Legal Holiday, (i) written notice of the
Holder's acceptance of such offer, which notice shall set forth the name of the
Holder, the principal amount of Securities (or portions thereof) to be
repurchased and a statement that an acceptance of the Net Worth Offer is being
made thereby and (ii) the Securities with respect to which the Net Worth Offer
is being accepted, duly endorsed for transfer to the Company, and the Holder of
such Securities shall be entitled to receive from the Company (if it is acting
as its own Paying Agent) or such Paying Agent a nontransferable receipt of
deposit evidencing such deposit. Such written notice may be withdrawn upon
further written notice delivered to the Trustee on or prior to the third day
preceding the Net Worth Repurchase Date.
If the Net Worth Repurchase Date is between a regular record date for
the payment of interest and the next succeeding interest payment date, any
Security to be repurchased must be accompanied by funds equal to the interest
payable on such succeeding interest payment date on the principal amount to be
repurchased (unless such Security shall have been called for redemption, in
which case no such payment shall be required), and the interest on the principal
amount of the Security being repurchased will be paid on such next succeeding
interest payment date to the registered holder of such Security on the
immediately preceding record date. A Security repurchased on an interest payment
date need not be accompanied by any payment, and the interest on the principal
amount of the Security being repurchased will be paid on such interest payment
date to the registered holder of such Security on the immediately preceding
record date.
(d) In the event a Net Worth Offer is accepted in accordance with the
terms hereof, the Company shall pay or cause to be paid the applicable Net Worth
Price with respect to the Securities as to which the Net Worth Offer shall have
been accepted (on a pro rata basis up to the Net Worth Offer Amount, plus
accrued interest) to the Holder on the Net Worth Repurchase Date.
(e) On the Net Worth Repurchase Date, the Company shall deliver to the
Trustee the amount of Securities to be credited against the Net Worth Offer
Amount and shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust in
accordance with Section 2.04) an amount of money sufficient to pay the Net Worth
Price payable in respect of all of the Securities which are to be repurchased on
that date, but in no event shall the Company be obligated to deposit an amount
in excess of the Net Worth Offer Amount, plus accrued interest.
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(f) Both the notice of the Company and the notice of the Holder having
been given as specified in this Section 4.09, the Securities to be repurchased
shall, on the Net Worth Repurchase Date, become due and payable at the Net Worth
Price applicable thereto and from and after such date (unless the Company shall
default in the payment of the Net Worth Price) such Securities shall cease to
bear interest. If any Security shall not be paid upon surrender thereof for
repurchase, the principal and interest (to the extent lawful) shall, until paid,
bear interest from the Net Worth Repurchase Date at the rate borne by such
Security.
(g) Any Security which is to be submitted for repurchase only in part
shall be delivered (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Security without any service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder, of the same tenor and in
aggregate principal amount equal to and in exchange for the portion of the
principal of such Security not submitted for repurchase.
(h) If any repurchase pursuant to the foregoing provisions constitutes
a tender offer as defined under the Exchange Act, the Company will comply with
the requirements of Rule 14e-1 and any other tender offer rules under the
Exchange Act which then may be applicable.
SECTION 4.10. LIMITATION ON DEBT
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee or
otherwise become liable for ("Incur") any Debt, except Permitted Debt.
Notwithstanding the foregoing, and subject to the immediately
succeeding paragraph, the Company and the Guarantors may Incur Debt if, at the
time such Debt is so Incurred and after giving effect thereto and the
application of the proceeds therefrom, the Company's Coverage Ratio shall not be
less than 2.0 to 1.0.
The Company will not, and will not cause or permit any Guarantor to,
directly or indirectly, Incur any Debt that purports to be by its terms (or by
the terms of any agreement governing such Debt) subordinated to any other Debt
of the Company or of such Guarantor, as the case may be, unless such Debt is
also by its terms (or by the terms of any agreement governing such Debt) made
expressly subordinated to the Securities or the Guarantee of such Guarantor, as
the case may be, to the same extent and in the same manner as such Debt is
subordinated to such other Debt.
For purposes of this Section 4.10, any waiver, extension or
continuation of any or all mandatory prepayments or installment payments or the
maturity date of any of the Debt Incurred
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pursuant to this Section 4.10 shall not be or be deemed to be the Incurrence of
Debt by the Company or its Restricted Subsidiaries.
SECTION 4.11. LIMITATION ON RESTRICTED PAYMENTS
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment, if, after
giving effect thereto:
(a) an Event of Default, or an event that through the passage
of time or the giving of notice, or both, would become an Event of
Default, shall have occurred and be continuing; or
(b) the Company would be unable to Incur $1.00 of additional
Debt under the second paragraph set forth under Section 4.10; or
(c) the aggregate amount of all Restricted Payments made by
the Company and its Restricted Subsidiaries (the amount expended or
distributed for such purposes, if other than cash, to be determined in
good faith by the board of directors of the Company) from and after
February 2, 1998 shall exceed the sum of:
(i) the aggregate of 50% of the Consolidated Net
Income of the Company accrued for the period (taken as one
accounting period) commencing with February 1, 1998 to and
including the first full month ended immediately prior to the
date of such calculation (or, in the event Consolidated Net
Income is a deficit, then minus 100% of such deficit);
(ii) the aggregate net proceeds (the amount of such
proceeds, if other than in cash, to be determined in good
faith by the board of directors of the Company) received by
the Company from the issuance or sale (other than to a
Subsidiary of the Company) of its Capital Stock (other than
Redeemable Stock), including the principal amount of any of
the Convertible Notes outstanding on February 2, 1998 and any
other convertible or exchangeable notes issued after February
2, 1998 or other convertible or exchangeable securities issued
after February 2, 1998, in any such case to the extent such
principal amount is converted or exchanged into Capital Stock
from and after February 2, 1998, and options, warrants and
rights to purchase its Capital Stock (other than Redeemable
Stock); PROVIDED that the net proceeds received by the Company
from the Equity Offering shall be excluded from this clause
(ii);
(iii) in the case of the disposition or repayment of
any Investment constituting a Restricted Payment made after
February 2, 1998 (excluding any Investment described in clause
(iv) of the following paragraph, but including upon the
redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary), an amount equal to the lesser of the return of
capital with respect to such Investment
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and the cost of such Investment, in either case, reduced (but
not below zero) by the excess, if any, of the cost of the
disposition of such Investment over the gain, if any, realized
by the Company or such Restricted Subsidiary in respect of
such disposition of such Investment; and
(iv) $5,000,000.
The foregoing paragraphs will not prevent (i) the payment of any
dividend within 60 days after the date of its declaration if such dividend could
have been made on the date of its declaration in compliance with the foregoing
provisions; (ii) so long as no Default or Event of Default shall have occurred
and be continuing, the redemption, repurchase or other acquisition or retirement
of any shares of any class of Capital Stock of the Company or any Subsidiary of
the Company in exchange for, or out of the net cash proceeds of, a substantially
concurrent (x) capital contribution to the Company from any Person (other than a
Subsidiary of the Company) or (y) issue and sale of other shares of Capital
Stock (other than Redeemable Stock) of the Company to any Person (other than to
a Subsidiary of the Company); PROVIDED, HOWEVER, that the amount of any such net
proceeds that are utilized for any such redemption, repurchase or other
acquisition or retirement shall be excluded from clause (ii) of the preceding
paragraph; (iii) so long as no Default or Event of Default shall have occurred
and be continuing, any redemption, repurchase or other acquisition or retirement
of Subordinated Debt by exchange for, or out of the net cash proceeds of, a
substantially concurrent (x) capital contribution to the Company from any Person
(other than a Subsidiary of the Company) or (y) issue and sale of (A) Capital
Stock (other than Redeemable Stock) of the Company to any Person (other than to
a Subsidiary of the Company); PROVIDED, HOWEVER, that the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase or other
acquisition or retirement shall be excluded from clause (ii) of the preceding
paragraph; or (B) Debt of the Company issued to any Person (other than a
Subsidiary of the Company), so long as such Debt (x) has no stated maturity
earlier than February 1, 2008, (y) has a Weighted Average Life to Maturity equal
to or greater than the remaining Weighted Average Life to Maturity of the
Securities and (z) is subordinated to the Securities in the same manner and at
least to the same extent as the Subordinated Debt so purchased, exchanged,
redeemed, acquired or retired; (iv) Investments constituting Restricted Payments
made as a result of the receipt of non-cash consideration from any Asset Sale
made pursuant to and in compliance with Section 4.15; (v) so long as no Default
or Event of Default has occurred and is continuing, the repurchase or redemption
of shares of Capital Stock from any officer, director or employee of the Company
or its Restricted Subsidiaries whose employment has been terminated or who has
died or become disabled in an aggregate amount not to exceed $250,000 per annum;
(vi) so long as no Default or Event of Default shall have occurred and be
continuing, the making of Restricted Payments in an aggregate amount not to
exceed $5,000,000; and (vii) the redemption of the Convertible Notes; PROVIDED
that amounts paid pursuant to clauses (i), (v) and (vi) (but not clauses (ii),
(iii), (iv) or (vii)) shall reduce amounts available for future Restricted
Payments under the first paragraph of this Section 4.11.
SECTION 4.12. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES
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The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, assume or otherwise cause or
suffer to exist or to become effective any consensual encumbrance or restriction
on the ability of any Restricted Subsidiary of the Company to (a) pay dividends
or make any other distributions on its Capital Stock to the Company or any of
its Restricted Subsidiaries; (b) make payments in respect of any Debt owed to
the Company or any of its Restricted Subsidiaries; or (c) make loans or advances
to the Company or any of the Company's Restricted Subsidiaries; PROVIDED,
HOWEVER, that the following restrictions shall not be prohibited pursuant to
this Section 4.12: (i) those contained in this Indenture, the Existing
Indenture, a Bank Facility, a Warehouse Facility, and Refinancing Debt (to the
extent restrictions contained in such Refinancing Debt are not more restrictive
than those contained in the Debt being refinanced); (ii) consensual encumbrances
or restrictions binding upon any Person at the time such Person becomes a
Subsidiary of the Company, PROVIDED that such encumbrances or restrictions are
not created, incurred or assumed in contemplation of such Person becoming a
Subsidiary of the Company and do not extend to any other property of the Company
or another of its Subsidiaries; (iii) restrictions contained in security
agreements permitted by this Indenture securing Debt permitted by this Indenture
to the extent such restrictions restrict the transfer of assets subject to such
security agreements; (iv) any encumbrance or restriction consisting of customary
nonassignment provisions in leases to the extent such provisions restrict the
transfer of the leases; (v) any encumbrance or restriction pursuant to an
agreement in effect on February 2, 1998; or (vi) any restrictions with respect
to a Subsidiary of the Company imposed pursuant to an agreement which has been
entered into for the sale or disposition of all or substantially all the Capital
Stock or assets of such Subsidiary.
SECTION 4.13. LIMITATION ON LIENS
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien upon or with respect to any of the assets of the Company or any
such Subsidiary, whether now owned or hereafter acquired, or on any income or
profits therefrom, other than Liens which constitute Permitted Liens at the date
such Liens are created, unless contemporaneously therewith or prior thereto all
payments due under this Indenture and the Securities 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. Notwithstanding the
foregoing, the Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on any Debt from the Company in favor of any Restricted
Subsidiary.
SECTION 4.14. TRANSACTIONS WITH AFFILIATES
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into any transactions with
Affiliates of the Company unless (i) such transactions are between or among the
Company and its Restricted Subsidiaries, (ii) such transactions are in the
ordinary course of business and consistent with past practice or (iii) the terms
of such transactions are as fair and reasonable to the Company or such
Restricted
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Subsidiary, as the case may be, and are at least as favorable at 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 between
unaffiliated parties. In the event of any transaction or series of transactions
occurring subsequent to February 2, 1998 with an Affiliate of the Company which
involves in excess of $1,000,000 and is not permitted under clause (i) of the
preceding sentence, all of the disinterested members of the board of directors
shall by resolution determine that such transaction or series of transactions
meets the criteria set forth in clause (iii) of the preceding sentence. In the
event of any transaction or series of transactions occurring subsequent to
February 2, 1998 with an Affiliate of the Company which involves in excess of
$10,000,000 and is not permitted under clause (i) above, the Company will be
required to deliver to the Trustee an opinion of an Independent Financial
Advisor to the effect that the transaction is fair to the Company or the
relevant Restricted Subsidiary, as the case may be, from a financial point of
view. Notwithstanding the foregoing, such provisions do not prohibit and will
not apply to (1) any Restricted Payment which is permitted by Section 4.11 or
(2) the payment of compensation to directors of the Company who are not
employees of the Company and wages and other compensation to officers of the
Company or any of its Subsidiaries.
SECTION 4.15. LIMITATION ON ASSET SALES
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, consummate an Asset Sale, unless (i)
the Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value (as determined in good faith by the board of directors of the Company or
the Restricted Subsidiary, as the case may be) of the assets disposed of, and
(ii) the consideration for such Asset Sale consists of at least 85% cash;
PROVIDED that (x) the amount of liabilities assumed by the transferee, (y) any
notes or other obligations received by the Company or such Restricted Subsidiary
and immediately converted into cash or (z) with respect to the sale or other
disposition of all of the Capital Stock of any Restricted Subsidiary, the amount
of liabilities that remain the obligation of such Restricted Subsidiary
subsequent to such sale or other disposition, shall be deemed to be "cash".
(b) Within 12 months from the date that any Asset Sale is consummated,
the Net Proceeds thereof shall be reinvested in Additional Assets or applied to
the redemption or repurchase of Debt of the Company which ranks PARI PASSU with
the Securities or Debt of a Restricted Subsidiary of the Company which is not
subordinated to other debt of such Restricted Subsidiary (which, in each case,
shall be a permanent reduction of such Debt). To the extent that the Net
Proceeds of an Asset Sale are not so applied, the Company or such Restricted
Subsidiary, as the case may be, shall, within 30 days from the expiration of
such 12-month period, use the remaining Net Proceeds (less any amounts used to
pay reasonable fees and expenses connected with a Net Proceeds Offer (as defined
below)) to make an offer (a "Net Proceeds Offer") to repurchase the Securities
at a price equal to 100% of the principal amount thereof, plus accrued interest
to the date of such repurchase, which date shall be on or before the 30th day
after the date of the Net Proceeds Offer (the "Net Proceeds Repurchase Date"),
in accordance with the provisions of clause (c) below.
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Notwithstanding the foregoing, the Net Proceeds of an Asset Sale are
not required to be applied in accordance with the preceding paragraph, unless
and until the aggregate Net Proceeds for all such Asset Sales in a 12-month
period exceeds $5,000,000.
(c) If the Company or one of its Restricted Subsidiaries is required to
make a Net Proceeds Offer pursuant to clause (b) above, the Company or such
Restricted Subsidiary, or, at the request of the Company, the Trustee, shall
give notice of the Net Proceeds Offer to each Holder (the "Net Proceeds Offer
Notice"). The Company shall also deliver a copy of the Net Proceeds Offer Notice
to the Trustee. Any such notice shall contain all instructions and materials
necessary to enable such Holders to deliver Securities pursuant to the Net
Proceeds Offer including, without limitation, the following:
(1) the Net Proceeds Repurchase Date;
(2) the date by which the Net Proceeds Offer must be accepted;
(3) the applicable amount of Net Proceeds being applied to the
repurchase of Securities in the Net Proceeds Offer (the "Purchase
Amount"); and
(4) that Securities are to be surrendered for payment.
To accept a Net Proceeds Offer a Holder shall deliver to the Company
(if it is acting as its own Paying Agent) or to a Paying Agent designated by the
Company for such purpose in the notice referred to above on or before the Net
Proceeds Repurchase Date, or, if such day is a Legal Holiday, the next
subsequent day which is not a Legal Holiday, (i) written notice of the Holder's
acceptance of the Net Proceeds Offer, which notice shall set forth the name of
the Holder, the principal amount of Securities (or portions thereof) to be
repurchased and a statement that an election to accept the Net Proceeds Offer is
being made thereby and (ii) the Securities with respect to which the Net
Proceeds Offer is being accepted, duly endorsed for transfer to the Company, and
the Holder of such Securities shall be entitled to receive from the Company (if
it is acting as its own Paying Agent) or such Paying Agent a nontransferable
receipt of deposit evidencing such deposit. Such written notice may be withdrawn
upon further written notice to the Trustee on or prior to the third day
preceding the Net Proceeds Repurchase Date.
If the Net Proceeds Repurchase Date is between a regular record date
for the payment of interest and the next succeeding interest payment date, any
Security to be repurchased must be accompanied by funds equal to the interest
payable on such succeeding interest payment date on the principal amount to be
repurchased (unless such Security shall have been called for redemption, in
which case no such payment shall be required), and the interest on the principal
amount of the Security being repurchased will be paid on such next succeeding
interest payment date to the registered holder of such Security on the
immediately preceding record date. A Security repurchased on an interest payment
date need not be accompanied by any payment, and the interest on the principal
amount of the Security being repurchased will be paid on such
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interest payment date to the registered holder of such Security on the
immediately preceding record date.
In the event a Net Proceeds Offer shall be accepted in accordance with
the terms hereof, the Company shall pay or cause to be paid the pro rata portion
of the Purchase Amount with respect to the Securities as to which the Net
Proceeds Offer shall have been accepted to the Holder on the Net Proceeds
Repurchase Date.
On or prior to a Net Proceeds Repurchase Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the Company is acting as
its own Paying Agent, segregate and hold in trust in accordance with Section
2.04) an amount of money equal to the Purchase Amount.
Both the notice of the Company and the notice of the Holder having been
given as specified above, the Securities to be repurchased shall, on the Net
Proceeds Repurchase Date, become due and payable and from and after such date
(unless the Company shall default in the payment of the Purchase Amount) such
Securities shall cease to bear interest. If any Security shall not be paid upon
surrender thereof for repurchase, the principal and interest shall, until paid,
bear interest from the Net Proceeds Repurchase Date at the rate borne by such
Security.
Any Security which is to be submitted for repurchase only in part shall
be delivered pursuant to this provision (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and make available for delivery to the Holder of
such Security without any service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder, of the same tenor and in
aggregate principal amount equal to and in exchange for the portion of the
principal of such Security not submitted for repurchase.
If any repurchase pursuant to the foregoing provisions constitutes a
tender offer as defined under the Exchange Act, the Company will comply with the
requirements of Rule 14e-1 and any other tender offer rules under the Exchange
Act which then may be applicable.
(d) Any amount of Net Proceeds remaining after a Net Proceeds Offer
shall be promptly returned by the Trustee to the Company and may be used by the
Company for any purpose not inconsistent with this Indenture.
SECTION 4.16. ADDITIONAL GUARANTORS
The Company shall cause any Subsidiary with a net book value greater
than $1,000,000 which is designated as a Restricted Subsidiary to,
simultaneously with its designation as a Restricted Subsidiary, execute and
deliver (i) a supplemental indenture to this Indenture,
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providing for the guarantee of payment of the Securities by such Subsidiary
pursuant to the terms of Article Ten hereof and (ii) a guarantee in the form
included in Exhibits A-1 and A-2 hereof.
ARTICLE 5
SUCCESSORS
SECTION 5.01. WHEN COMPANY MAY MERGE, ETC.
Neither the Company nor any Guarantor shall 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 Securities, the
Guarantees or this Indenture (as an entirety or substantially as an entirety in
one transaction or a series of related transactions), to any Person or permit
any of its Restricted Subsidiaries to do any of the foregoing (in each case
other than with the Company or another Wholly Owned Restricted Subsidiary)
unless:
(1) the Person formed by or surviving any such consolidation
or merger (if other than the Company or such Guarantor, as the case may
be), or to which such sale, lease, conveyance or other disposition or
assignment will be made (collectively, the "Successor"), is a
corporation or other legal entity organized and existing under the laws
of the United States, any state thereof or the District of Columbia;
(2) the Successor assumes by supplemental indenture in a form
reasonably satisfactory to the Trustee all of the obligations of the
Company or such Guarantor, as the case may be, under the Securities or
such Guarantor's Guarantee, as the case may be, and this Indenture;
(3) immediately after giving effect to such transaction no
Default or Event of Default has occurred and is continuing;
(4) immediately after giving effect to such transaction and
the use of any net proceeds therefrom, on a pro forma basis, the
Consolidated Tangible 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 Tangible Net Worth of the Company
immediately prior to such transaction; and
(5) in the case of a transaction involving the Company,
immediately after giving effect to such transaction and the use of any
net proceeds therefrom, on a pro forma basis, the Coverage Ratio of the
Company or the Successor (in the case of a transaction involving the
Company), as the case may be, would be such that the Company or the
Successor (in the case of a transaction involving the Company), as the
case may be, would be entitled to Incur at least $1.00 of additional
Debt under such Coverage Ratio test set forth in Section 4.10.
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The foregoing provisions shall not apply to a transaction involving the
consolidation or merger of a Guarantor with or into another Person, or the sale,
lease, conveyance or other disposition of all or substantially all of the assets
of such Guarantor, that results in such Guarantor being released from its
Guarantee as provided under its Guarantee.
Notwithstanding the foregoing, clauses (4) and (5) shall not prohibit a
transaction, the principal purpose of which is (as determined in good faith by
the board of directors of the Company) to change the state of incorporation of
the Company, and such transaction does not have as one of its purposes the
evasion of the restrictions of this Section 5.01.
The Company shall deliver to the Trustee prior to the consummation of
the proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
SECTION 5.02. SUCCESSOR SUBSTITUTED
Upon any consolidation, merger, sale, assignment, transfer, lease or
other disposition of all or substantially all of the assets of the Company in
accordance with Section 5.01, the Successor shall succeed to, and be substituted
for, and may exercise every right and power of, and shall assume every duty and
obligation of, the Company under this Indenture with the same effect as if such
Successor had been named s the Company herein. When the Successor assumes all
obligations of the Company hereunder, all obligations of the predecessor shall
terminate.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT
An "Event of Default" occurs if:
(1) the Company fails to pay interest on any Security when the
same becomes due and payable and such failure continues for a period of
30 days;
(2) the Company fails to pay the principal of any Security
when the same becomes due and payable at maturity, upon acceleration or
otherwise;
(3) the Company or any Guarantor defaults in the observance or
performance of any other covenant or agreement of the Company or the
Guarantors in the Securities, the Guarantees or this Indenture and the
default continues for the period and after the notice specified below;
(4) an event of default shall have occurred under one or more
evidences of Debt of the Company or any of its Restricted Subsidiaries
(other than Non-Recourse
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Debt) with an outstanding aggregate principal amount of $5,000,000 or
more, whether such Debt now exists or is created hereafter, which event
of default (i) consists of the failure by the Company or any Restricted
Subsidiary to make any payment in respect of such Debt at its final
maturity or (ii) results in the acceleration of such Debt, which
acceleration shall be in effect;
(5) any final judgment or judgments for the payment of money
in excess of $5,000,000 in the aggregate are rendered against the
Company or any of its Restricted Subsidiaries and such judgment or
judgments remain unstayed, unsatisfied or undischarged for the period
and after the notice specified below;
(6) any Guarantee of a Material Subsidiary ceases to be in
full force and effect (other than in accordance with the terms of such
Guarantee and this 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
Guarantee and this Indenture);
(7) the Company or any of its Material Subsidiaries 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; or
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case,
(B) appoints a Custodian of the Company for all or
substantially all of its property, or
(C) orders the liquidation of the Company,
and the order or decree remains unstayed and in effect for 90
days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or State law for the relief of debtors.
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The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
A default under clause (3) or (5) is not an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the Securities
then outstanding notify the Company of the default and the Company does not cure
the default within 60 days after receipt of the notice. The notice must specify
the default, demand that it be remedied and state that the notice is a "Notice
of Default". If the Holders of 25% in principal amount of Securities then
outstanding request the Trustee to give such notice on their behalf, the Trustee
shall do so.
The Trustee shall not be deemed to have notice of any Default hereunder
unless it shall have actual knowledge of such Default or it shall have received
written notice thereof making specific reference to such Default as a Default.
SECTION 6.02. ACCELERATION
If an Event of Default (other than an Event of Default specified in
Section 6.01(7) or Section 6.01(8) with respect to the Company) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in principal amount of the Securities then outstanding by notice to the Company
and the Trustee, may declare the principal of and accrued interest on all the
Securities to be due and payable. Upon such declaration such principal and
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.01(7) or Section 6.01(8), with respect to the Company occurs, all
unpaid principal and accrued interest on the Securities then outstanding shall
IPSO FACTO become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Securityholder. The Holders of a
majority in principal amount of the Securities then outstanding by notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration.
SECTION 6.03. OTHER REMEDIES
Notwithstanding any other provision of this Indenture, if an Event of
Default occurs and is continuing, the Trustee may pursue any available remedy by
proceeding at law or in equity to collect the payment of principal of or
interest on the Securities or to enforce the performance of any provision of the
Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative.
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SECTION 6.04. WAIVER OF PAST DEFAULTS
Subject to Sections 6.07 and 9.02, the Holders of a majority in
principal amount of the Securities then outstanding by notice to the Trustee may
waive an existing Default and its consequences. When a Default is waived, it is
cured and ceases; but no such waiver shall extend to any other default.
SECTION 6.05. CONTROL BY MAJORITY
The Holders of a majority in principal amount of the Securities then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability and the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 6.06. LIMITATION ON SUITS
Except as provided in Section 6.07, a Securityholder may pursue a
remedy with respect to this Indenture or the Securities only if:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in principal amount of the
Securities then outstanding make a written request to the Trustee to
institute proceedings in respect of such Event of Default;
(3) such Holder or Holders offer to the Trustee reasonable
indemnity against any loss, liability or expense to be thereby incurred
(including reasonable attorneys' fees);
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in
principal amount of the Securities then outstanding do not give the
Trustee a direction inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT
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Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal of and interest on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of he Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 6.01(1) or (2) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company for the whole amount of principal and
interest remaining unpaid.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee, any
predecessor Trustee and the Securityholders allowed in any judicial proceedings
relative to the Company, its creditors or its property.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of the
Securities any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to authorize
the Trustee to vote in respect of the claim of any Holder of the Securities in
any such proceeding.
SECTION 6.10. PRIORITIES
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment by
it to Securityholders pursuant to this Section.
SECTION 6.11. UNDERTAKING FOR COSTS
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In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit other than the Trustee of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
principal amount of the Securities.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture but need not verify the accuracy of the content
thereof.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
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(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense, including reasonable attorneys' fees.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree with the Company. Money held in trust by
the Trustee need not be segregated from other funds except to the extent
required by law.
(g) The Trustee shall not be required to give any bond or surety with
respect to the execution of its rights and powers or with respect to this
Indenture.
(h) The Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions or agreements on the part
of the Company hereunder; but the Trustee may require of the Company full
information and advice as to the performance of the covenants, conditions and
agreements as aforesaid.
SECTION 7.02. RIGHTS OF TRUSTEE
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate and/or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Certificate or Opinion.
(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(e) It shall not be the duty of the Trustee, except as expressly
provided herein, to ensure that any duties or obligations herein imposed upon
the Company or any other Person are performed, and, except as expressly provided
herein, the Trustee shall not be liable or responsible for the failure of any
other Person to perform any act required of it or them by this Indenture.
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(f) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate thereof with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee, however, must comply with
Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities; it shall not be accountable for the Company's
use of the proceeds from the Securities; and it shall not be responsible for any
statement in the Securities other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS
If a Default occurs and is continuing and if it is actually known to
the Trustee or the Trustee has received written notice thereof, the Trustee
shall mail to each Securityholder a notice of the Default within 90 days after
it occurs. Except in the case of a Default in payment of principal of or
interest on any Security, the Trustee may withhold the notice if and so long as
it in good faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS
If required by TIA ss. 313(a), within 60 days after each March 1
beginning with March 1, 1998, the Trustee shall mail to each Securityholder as
required by TIA ss. 313(c) a brief report dated as of such date that complies
with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b) and (c).
A copy of each report at the time of its mailing to Securityholders
shall be filed by the Trustee with the SEC and each stock exchange, if any, on
which the Securities are listed. The Company shall notify the Trustee when the
Securities are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY
The Company shall pay to the Trustee from time to time such
compensation for its services as shall be agreed upon ln writing. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred by it. Such expenses shall include
the reasonable compensation and out-of-pocket expenses of the Trustee's agents
and counsel.
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The Company shall indemnify the Trustee against any loss or liability
(including the fees and expenses of counsel) incurred by it in connection with
the administration of this trust and the performance of its duties hereunder.
The Company need not pay for any settlement made without its consent. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnification. The Company need not reimburse any expense or indemnify against
any loss or liability incurred by the Trustee through the Trustee's negligence
or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(7) or (8) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities may remove the Trustee by so
notifying the Trustee and the Company and may appoint a successor Trustee with
the Company's consent. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal
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amount of the Securities may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
Notwithstanding the replacement of the Trustee pursuant to Section
7.08, the Company's obligation to compensate the retiring Trustee under Section
7.07 for services rendered prior to its retirement shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to another corporation, the
successor corporation without any further act shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1). The Trustee shall always have a combined
capital and surplus of at least $10,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA ss.
310(b), PROVIDED that there shall be excluded from the operation of TIA ss.
310(b)(1) the 1994 Indenture and any other indenture or indentures under which
other securities, or certificates of interest or participation in other
securities, of the Company are outstanding and meeting the requirements for
exclusion set forth in TIA ss. 310(b)(1).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE 8
DEFEASANCE
SECTION 8.01. DEFEASANCE UPON DEPOSIT OF MONEYS OR U.S. GOVERNMENT
OBLIGATIONS
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This Indenture and the Guarantees shall cease to be of further effect
(except that the Company's obligations under Sections 7.07 and 8.05 hereof shall
survive) when all outstanding Securities theretofore authenticated and issued
(other than Securities which have been destroyed, lost or stolen and which have
been replaced as provided in Section 2.07 hereof) have been delivered to the
Trustee for cancellation and the Company has paid all sums payable hereunder.
Notwithstanding the first paragraph of this Section 8.01, at the
Company's option indicated by notice to the Trustee, either (a) the Company
shall be deemed to have been Discharged (as defined below) from its obligations
with respect to the Securities on the 91st day after the applicable conditions
set forth below have been satisfied or (b) the Company shall cease to be under
any obligation to comply with any term, provision or condition set forth in
Sections 4.07 through 4.16 and shall cease to be subject to the provisions of
Section 6.01(3) with respect to Sections 4.07 through 4.16 and Section 6.01(4)
with respect to the Securities at any time after the conditions set forth below
have been satisfied:
(1) the Company shall have deposited or caused to be deposited
irrevocably with the Trustee as trust funds in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Securities (i) money in an amount, or (ii) U.S.
Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment,
money in an amount, or (iii) a combination of (i) and (ii), sufficient,
in the opinion with respect to (ii) and (iii) of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and
discharge each installment of principal of and interest on the
outstanding Securities on the dates such installments of interest or
principal are due;
(2) the Company shall have delivered to the Trustee an Opinion
of Counsel stating that the Holders of the outstanding Securities will
not recognize income, gain or loss for Federal income tax purposes as a
result of such defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such defeasance had not occurred;
(3) such deposit will not result in a breach or violation of,
or constitute a Default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound;
(4) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit; and
(5) the Company shall have delivered to the Trustee an
Officers Certificate stating that the conditions set forth in this
Section 8.01 have been satisfied or complied with.
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"Discharged" shall mean that the Company and each Guarantor shall be
deemed to have paid and discharged the entire indebtedness represented by, and
obligations under, the Securities and to have satisfied all the obligations
under this Indenture and the Guarantees relating to the Securities (and the
Trustee, upon the request of the Company and at the expense of the Company,
shall execute proper instruments acknowledging the same).
SECTION 8.02. TERMINATION OF THE OBLIGATIONS PURSUANT TO REDEMPTION
The Company and each Guarantor may terminate its obligations under the
Securities, this Indenture and the Guarantees (except that the Company's
obligations under Sections 7.07 and 8.05 hereof shall survive) and the Company
and the Guarantors shall be deemed to have been Discharged from its Obligations
with respect to the Securities and the Guarantees if:
(a) either (i) pursuant to Article Three, the Company shall have given
notice to the Trustee and mailed a notice of redemption to each Holder of the
redemption of all of the Securities under arrangements satisfactory to the
Trustee for the giving of such notice or (ii) all Securities have otherwise
become due and payable hereunder;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee reasonably satisfactory to the Trustee,
under the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the benefit of
the Holders for that purpose, money in such amount as is sufficient without
consideration of reinvestment of such interest, to pay principal of, premium, if
any, and interest on the outstanding Securities to maturity or redemption, as
certified in a certificate of a nationally recognized firm of independent public
accountants; PROVIDED that the Trustee shall have been irrevocably instructed to
apply such money to the payment of said principal, premium, if any, and interest
with respect to the Securities;
(c) no Default of Event of Default with respect to this Indenture or
the Securities shall have occurred and be continuing on the date of such deposit
or shall occur as a result of such deposit and such deposit will not result in a
breach or violation of, or constitute a default under, any other instrument to
which the Company is a party or by which it is bound;
(d) the Company shall have paid all other sums payable by it hereunder;
and
(e) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the conditions set forth in this Section 8.02 have been
complied with.
SECTION 8.03. SURVIVAL OF COMPANY'S OBLIGATIONS
Notwithstanding the satisfaction and discharge of this Indenture under
Section 8.01 or Section 8.02, the Company's obligations in Sections 2.04, 2.05,
2.06, 2.07, 2.08, 4.01, 4.02, 4.05, 7.07, 7.08, 8.04, 8.05 and 8.06, however,
shall survive until the Securities are no longer
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outstanding. Thereafter, the Company's obligations in Sections 7.07, 8.05 and
8.06 shall survive.
SECTION 8.04. APPLICATION OF TRUST MONEY
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.01. It shall apply the deposited money
and the money from U.S. Government Obligations in accordance with this Indenture
to the payment of principal of and interest on the Securities.
SECTION 8.05. REPAYMENT TO COMPANY
The Trustee and the Paying Agent shall promptly pay to the Company upon
request any excess money or securities held by them at any time. The Trustee and
the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal or interest that remains unclaimed for two years,
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once in a newspaper of general circulation in the City of New York or
mail to each such Holder notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication or mailing, any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the Company,
Securityholders entitled to the money must look to the Company for payment as
general creditors unless applicable abandoned property law designates another
person.
The Company shall indemnify Trustee to the fullest extent permissible
by law for the Trustee's failure to comply with any abandoned property or
escheat law by acting in accordance with this Section 8.05.
SECTION 8.06. REINSTATEMENT
If the Trustee is unable to apply any money or U.S. Government
Obligations in accordance with Section 8.01 by reason of any legal proceeding or
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.01 until such
time as the Trustee is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 8.01; PROVIDED, HOWEVER, that if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee.
ARTICLE 9
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AMENDMENTS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS
The Company and the Guarantors, with the consent of the Trustee, may
amend or supplement this Indenture, the Securities or the Guarantees without
notice to or the consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
PROVIDED that such amendment or supplement does not adversely affect
the rights of any Securityholder;
(2) to comply with Section 5.01;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities;
(4) to make any change that does not materially adversely
affect the rights of any Securityholder hereunder, including, without
limitation, any amendments reasonably necessary to issue additional
Securities hereunder;
(5) to comply with the qualification of this Indenture under
the TIA; or
(6) to reflect a Guarantor ceasing to be liable on the
Guarantees because it is no longer a Subsidiary of the Company or to
reflect additional Guarantors.
For the purposes of Section 9.01, the Trustee may, in its discretion,
determine whether or not the Holder of any Securities would be materially
adversely affected by any amendment, or supplement to this Indenture and any
such determination shall be conclusive upon every Holder, whether theretofore or
thereafter entered into. The Trustee shall, subject to the express provisions of
this Indenture, not be liable for any such determination made in good faith and
shall be entitled to, and may rely upon, an Opinion of Counsel with respect
thereto.
SECTION 9.02. WITH CONSENT OF HOLDERS
The Company and the Guarantors, with the consent of the Trustee, may
amend or supplement this Indenture and waive any existing Default or Event of
Default (other than any continuing Default or Event of Default in the payment of
interest on or the principal of the Securities), the Securities or the
Guarantees without notice to any Securityholder but with the written consent of
the Holders of at least a majority in principal amount of the Securities then
outstanding (which may include consents obtained in connection with a tender
offer or exchange offer for the Securities). Subject to Section 6.07, the
Holders of a majority in principal amount of the Securities then outstanding may
waive compliance by the Company or any Guarantor with any provision of this
Indenture, the Securities or the Guarantees without notice to any
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Securityholder. However, without the consent of each Securityholder affected, an
amendment, supplement or waiver, including a waiver pursuant to Section 6.04,
may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of
interest, including defaulted interest, on any Security;
(3) reduce the principal of or change the fixed maturity of
any Security (including, without limitation, the optional redemption
provisions, but excluding Sections 4.08, 4.09 and 4.15);
(4) waive a Default or Event of Default in the payment of
principal of or interest on any Security;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any change in Section 6.04, Section 6.07 or Section
9.02;
(7) adversely modify the terms and conditions of the
obligations of the Guarantors or ranking or priority of the Securities
or any Guarantee; or
(8) release any Guarantor from any of its obligations under
its Guarantee or this Indenture otherwise than in accordance with the
terms hereof.
Promptly after an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing the amendment.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment or supplement,
but it shall be sufficient if such consent approves the substance thereof.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment to this Indenture, the Securities or the Guarantees
shall comply with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent
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Holder may revoke the consent as to his Security or portion of a Security if the
Trustee receives the notice of revocation before the date the amendment,
supplement or waiver becomes effective. An amendment, supplement or waiver
becomes effective in accordance with its terms and thereafter binds every
Securityholder.
After an amendment, supplement or waiver becomes effective with respect
to the Securities, it shall bind every Securityholder unless it makes a change
described in any of clauses (1) through (8) of Section 9.02. In that case the
amendment, supplement or waiver shall bind each Holder of a Security who has
consented to it and; PROVIDED that notice of such amendment, supplement or
waiver is reflected on a Security that evidences the same debt as the consenting
Holder's Security, every subsequent Holder of a Security or portion of a
Security that evidences the same debt as the consenting Holder's Security.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
SECTION 9.06. TRUSTEE PROTECTED
The Trustee need not sign any amendment, supplement or waiver
authorized pursuant to this Article that adversely affects the Trustee's rights.
The Trustee shall be entitled to receive and rely upon an Opinion of Counsel and
an Officers' Certificate that any supplemental indenture complies with this
Indenture.
ARTICLE 10
GUARANTEE OF SECURITIES
SECTION 10.01. GUARANTEE
Subject to the provisions of this Article 10, each Guarantor (which
term includes any successor Person under this Indenture and any additional
Guarantor pursuant to Section 4.16 of this Indenture) for consideration received
hereby jointly and severally unconditionally and irrevocably guarantees on a
senior basis (each a "Guarantee", and collectively, the "Guarantees") to each
Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Securities or the obligations of the
Company or any other Guarantor to the Holders or the Trustee hereunder or
thereunder, that: (a) the principal of, premium, if any, and interest on the
Securities will be duly and punctually paid in full when due, whether at
maturity, as a result of redemption,
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upon a Change of Control, as a result of a Net Worth Offer, by acceleration or
otherwise, and interest on the overdue principal, premium, if any, and (to the
extent permitted by law) interest, if any, on the Securities and all other
payment obligations of the Company or the Guarantors to the Holders or the
Trustee hereunder or thereunder (including fees, expenses or other) will be
promptly paid in full or performed, all in accordance with the terms hereof and
thereof; (b) all other obligations under this Indenture to the Holders or the
Trustee will be duly and punctually performed all in accordance with the terms
of this Indenture and the Securities and (c) in case of any extension of time of
payment or renewal of any Securities or any such other obligations, 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, as a result of
redemption, upon a Change of Control, as a result of a Net Worth Offer, by
acceleration or otherwise. Failing payment or performance when due of any amount
or obligations so guaranteed for whatever reason, each Guarantor will be
obligated to pay or perform the same immediately. An Event of Default under this
Indenture or the Securities shall constitute an event of default under the
Guarantees, and shall entitle the Holders of Securities to accelerate the
obligations of the Guarantors hereunder in the same manner and to the same
extent as the obligations of the Company.
Each of the Guarantors hereby agrees that its obligations hereunder
shall be absolute and unconditional, irrespective of, and shall be unaffected
by, the invalidity, irregularity or unenforceability of the Securities or this
Indenture, the absence of any action to enforce the same, any waiver,
modification or consent by any holder of the Securities with respect to any
provisions hereof or thereof, any release of any other Guarantor, the recovery
of any judgment against the Company, any action to enforce the same, whether or
not a Guarantee is affixed to any particular Security, or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Each of the Guarantors hereby waives the benefit of diligence,
presentment, demand of payment, filing of claims with a court in the event of
merger, insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that its Guarantee will not be discharged except by complete
performance of the obligations contained in the Securities, this Indenture and
its Guarantee. If any Holder or the Trustee is required by any court or
otherwise to return to the Company or to any Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to the Company
or such Guarantor, any amount paid by the Company or such Guarantor to the
Trustee or such Holder, its Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor further agrees
that, as between it, on the one hand, and the Holders of Securities and the
Trustee, on the other hand, (a) subject to this Article 10, the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of its Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (b) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by such Guarantor
for the purpose of its Guarantees.
The Guarantees shall remain in full force and effect and continue to be
effective should any petition be filed by or against the Company for liquidation
or reorganization, should the
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Company become insolvent or make an assignment for the benefit of creditors or
should a receiver or trustee be appointed for all or any significant part of the
Company's assets, and shall, to the fullest extent permitted by law, continue to
be effective or be reinstated, as the case may be, if at any time payment of the
Securities are, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee on the Securities, whether
as a "voidable preference," "fraudulent transfer" or otherwise, all as though
such payment had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Securities shall, to
the fullest extent permitted by law, be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
For purposes of this Article 10, each Guarantor's liability (a
Guarantor's "Base Guaranty Liability") shall be that amount from time to time
equal to the aggregate liability of a Guarantor hereunder, but shall be limited
to the lessor of (A) the aggregate amount of the obligation as stated in the
first sentence of this Section 10.01 with respect to the Securities or (B) the
amount, if any, which would not have (i) rendered such Guarantor "insolvent" (as
such term is defined in Section 101(29) of the Federal Bankruptcy Code and in
Section 271 of the Debtor and Creditor Law of the State of New York, as each is
in effect at the date of this Indenture) or (ii) left it with unreasonably small
capital at the time its Guarantee of the Securities was entered into, after
giving effect to the incurrence of existing Debt immediately prior to such time,
provided, that, it shall be a presumption in any lawsuit or other proceeding in
which a Guarantor is a party that the amount guaranteed is the amount set forth
in (A) above unless a creditor, or representative of creditors of such Guarantor
or a trustee in bankruptcy of the Guarantor, as debtor in possession, otherwise
proves in such a lawsuit that the aggregate liability of the Guarantor is
limited to the amount set forth in (B). In making any determination as to the
solvency or sufficiency of capital of a Guarantor in accordance with the
previous sentence, the right of such Guarantor to contribution from other
Guarantors, to subrogation pursuant to the next paragraph and any other rights
such Guarantor may have contractual or otherwise shall be taken into account.
Each Guarantor shall be subrogated to all rights of the Holder of any
Securities and the Trustee against the Company or any of the other Guarantors in
respect of any amounts paid to the Holder and the Trustee by such Guarantor
pursuant to the provisions of this Guarantee; provided, however, that such
Guarantor shall not be entitled to enforce, or to receive any payments arising
out of or based upon, such right of subrogation until the principal of, premium,
if any, and interest on all the Securities have been paid in full.
Nothing contained in this Article 10 or elsewhere in this Indenture or
in any Security is intended to or shall impair, as between the Guarantors and
the Holders and the Trustee, the obligation of each Guarantor, which is absolute
and unconditional, to pay the Holders and the Trustee the principal of, premium,
if any, and interest on the Securities as and when the same shall become due and
payable and to perform all other obligations in accordance with the provisions
of this Guarantee, nor shall anything herein or therein prevent the Trustee or
any Holder from exercising all remedies otherwise permitted by applicable law
upon Default under this Indenture.
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The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantees.
SECTION 10.02. EXECUTION AND DELIVERY OF GUARANTEE
To further evidence the Guarantee set forth in Section 10.01, each
Guarantor hereby agrees that a notation of such Guarantee, substantially in the
form included in Exhibits A-1 and A-2 hereto, shall be endorsed on each Security
authenticated and delivered by the Trustee after such Guarantee is executed and
executed by either manual or facsimile signature of an officer of each
Guarantor. The validity and enforceability of any Guarantee shall not be
affected by the fact that it is not affixed to any particular Security.
Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Security a notation of such Guarantee.
If an officer of a Guarantor whose signatures is on this Indenture or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, such Guarantor's Guarantee of such Security
shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of the Guarantor.
SECTION 10.03. ADDITIONAL GUARANTORS
Any person may become a Guarantor by executing and delivering to the
Trustee (a) a supplemental indenture in form and substance satisfactory to the
Trustee, which subjects such person to the provisions of this Indenture as a
Guarantor, and (b) an Opinion of Counsel to the effect that such supplemental
indenture has been duly authorized and executed by such person and constitutes
the legal, valid, binding and enforceable obligation of such person (subject to
such customary exceptions concerning fraudulent conveyance laws, creditors'
rights and equitable principles as may be acceptable to the Trustee in its
discretion).
SECTION 10.04. RELEASE OF A GUARANTOR
(a) Upon the sale or disposition of all of the assets or all of the
Capital Stock of a Guarantor by the Company or a Subsidiary of the Company, or
upon the consolidation or merger of a Guarantor with or into any Person (in each
case, other than to the Company or an Affiliate of the Company), such Guarantor
shall be deemed automatically and unconditionally released and discharged from
all obligations under this Article 10 without any further action required on the
part of the Trustee or any Holder, if all obligations of such Guarantor, if any,
in respect of any Indebtedness of the Company shall also terminate upon such
transaction; PROVIDED, HOWEVER, that
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each such Guarantor is sold or disposed of in accordance with Section 4.15
hereof; PROVIDED, FURTHER, that the foregoing proviso shall not apply to the
sale or disposition of a Guarantor in a foreclosure to the extent that such
proviso would be inconsistent with the requirements of the Uniform Commercial
Code.
(b) The Trustee shall deliver an appropriate instrument evidencing the
release of a Guarantor upon receipt of a request of the Company accompanied by
an Officers' Certificate certifying as to the compliance with this Section
10.04. Any Guarantor not so released or the entity surviving such Guarantor, as
applicable, will remain or be liable under its Guarantee as provided in this
Article 10.
The Trustee shall execute any documents reasonably requested by the
Company or a Guarantor in order to evidence the release of such Guarantor from
its obligations under its Guarantee endorsed on the Securities and under this
Article 10.
Except as set forth in Articles 4 and 5 and this Section 10.04, nothing
contained in this Indenture or in any of the Securities shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor or shall prevent any sale or conveyance of the property of a Guarantor
as an entirety or substantially as an entirety to the Company or another
Guarantor.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
SECTION 11.02. NOTICES
Any notice or communication by the Company, the Guarantors or the
Trustee to the other, is duly given if in writing and delivered in person,
mailed by first-class mail or by express delivery to the other's address stated
in this Section 11.02. The Company, the Guarantors or the Trustee by notice to
the other, may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication to a Securityholder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Securityholder or any defect in
it shall not affect its sufficiency with respect to other Securityholders.
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If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Securityholders, it
shall mail a copy to the Trustee and each Agent at the same time.
All notices or communications shall be in writing.
The Company's address is, and notices to the Guarantors may be sent in
care of:
Engle Homes, Inc.
123 N.W. 13th Street
Boca Raton, Florida 33432
Attention: David Shapiro
With a copy to:
Greenberg Traurig Hoffman Lipoff
Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Bruce E. Macdonough
The Trustee's address is:
American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
Attention: Corporation Trust Department
SECTION 11.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT
Upon any request or application by the Company and/or a Guarantor to
the Trustee to take any action under this Indenture the Company or such
Guarantor, as the case may be, shall furnish to the Trustee:
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(1) an Officers' Certificate stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Each signer of an Officers' Certificate or an Opinion of Counsel may
(if so stated) rely, effectively, upon an Opinion of Counsel as to legal matters
and an Officers' Certificate as to factual matters if such signer reasonably and
in good faith believes in the accuracy of the document relied upon.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for their respective functions.
SECTION 11.07. LEGAL HOLIDAYS
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions are not required to be open in The City of New York, in the State
of New York or in the city in which the Trustee administers its corporate trust
business. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue on that payment for the intervening
period.
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A "business day" is a day other than a Legal Holiday.
SECTION 11.08. NO RECOURSE AGAINST OTHERS
No director, officer, controlling person, employee or stockholder of
the Company, any Guarantor or any successor Person thereof shall have any
liability for any obligations, covenants or agreements of the Company or any
Guarantor under the Securities or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all such liability.
The waiver and releases are part of the consideration for the issue of the
Securities.
SECTION 11.09. DUPLICATE ORIGINALS
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 11.10. GOVERNING LAW
The laws of the State of New York, without regard to principles of
conflicts of law, shall govern this Indenture, the Securities and the
Guarantees.
SECTION 11.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This 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 Indenture.
SECTION 11.12. SUCCESSORS
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 11.13. SEPARABILITY
In case any provision in this Indenture or in the Securities shall be
valid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby
and a Holder shall have no claim therefor against any party hereto.
SECTION 11.14. TABLE OF CONTENTS, HEADINGS, ETC
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Trustee
By: /S/ HERBERT J. LEMMER
---------------------------------------
Name: Herbert J. Lemmer
Title: Vice President
ENGLE HOMES, INC.
By: /S/ DAVID SHAPIRO
---------------------------------------
Name: David Shapiro
Title: Vice President
BANYAN TRAILS, INC.
BILTMORE SOUTH CORP.
ENGLE HOMES/ARIZONA, INC.
ENGLE HOMES/ATLANTA, INC.
ENGLE HOMES/BROWARD, INC.
ENGLE HOMES/COLORADO, INC.
ENGLE HOMES/GULF COAST, INC.
ENGLE HOMES/JACKSONVILLE, INC.
ENGLE HOMES/LAKE BERNADETTE, INC.
ENGLE HOMES/NORTH CAROLINA, INC.
ENGLE HOMES/ORLANDO, INC.
ENGLE HOMES/PALM BEACH, INC.
ENGLE HOMES/PEMBROKE, INC.
ENGLE HOMES/SOUTHWEST FLORIDA, INC.
ENGLE HOMES/TEXAS, INC.
ENGLE HOMES/VIRGINIA, INC.
ENGLE HOMES REALTY, INC.
GREENLEAF HOMES, INC.
PEMBROKE FALLS REALTY, INC.
PREFERRED BUILDERS REALTY, INC.
PREFERRED HOME MORTGAGE COMPANY
ST. TROPEZ AT BOCA GOLF, INC.
UNIVERSAL LAND TITLE, INC.
ENGLE HOMES/ARIZONA CONSTRUCTION, INC.
UNIVERSAL LAND TITLE OF COLORADO, INC.
By: /S/ DAVID SHAPIRO
---------------------------------------
Authorized Officer
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EXHIBIT A-1
[FORM OF SERIES B SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1993, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" ( AS DEFINED IN RULE 144A
PROMULGATED UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501 (a)(l), (2), (3) OR (7) PROMULGATED UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR"), (2) AGREES THAT IT
WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER
THEREOF OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A PROMULGATED UNDER THE SECURITIES ACT, (C) TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHED (OR
HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 PROMULGATED UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, WRITTEN LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE 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.
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REGISTERED $________________
NUMBER
ENGLE HOMES, INC.
................ CUSIP _________
9 1/4% SERIES B SENIOR NOTE DUE 2008
ENGLE HOMES, INC., a Florida corporation (herein called the "Company"),
for value received, hereby promises to pay to ________________________________,
or registered assigns, the principal sum of ____________________________________
Dollars on February 1, 2008, and to pay interest thereon as provided on the
reverse hereof, until the principal hereof is paid or duly provided for.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
The provisions on the back of this certificate are incorporated as if
set forth on the face hereof.
IN WITNESS WHEREOF, ENGLE HOMES, INC. has caused this instrument to be
duly signed under its corporate seal.
[SEAL] ENGLE HOMES, INC.
By:
----------------------------------
[TITLE]
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Trustee
By:
-------------------------------------
Signatory
Dated:
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ENGLE HOMES, INC.
9 1/4% SERIES B SENIOR NOTE DUE 2008
1. INTEREST. Engle Homes, Inc., a Florida corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate
PER ANNUM shown above. The Company will pay interest semi-annually on February 1
and August 1 of each year, commencing August 1, 1998. Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from June 12, 1998. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Securities
(except defaulted interest) to the persons who are registered Holders of
Securities at the close of business on the record date set forth on the face of
this Security next preceding the applicable interest payment date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
However, the Company must pay principal and interest by check payable in such
money. The Company may, at its option, mail an interest check to a Holder's
registered address.
3. PAYING AGENT AND REGISTRAR. Initially, American Stock Transfer &
Trust Company (the "Trustee") will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-registrar without notice.
The Company may act in any such capacity.
4. INDENTURE. The Company issued the Securities under an Indenture
dated as of June 12, 1998 (the "Indenture") between the Company, the Guarantors
party thereto and the Trustee. The terms of the Securities include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb) (the
"Act"), as in effect on the date of the Indenture. The Securities are subject to
all such terms, and Securityholders are referred to the Indenture and the Act
for a statement of such terms. The Securities are general unsecured senior
obligations of the Company limited in aggregate principal amount to $50,000,000
issued on the Issue Date and additional principal amounts issuable thereafter
subject to the terms of the Indenture. Terms used herein which are defined in
the Indenture have the meanings assigned to them in the Indenture.
5. OPTIONAL REDEMPTION. The Securities may be redeemed on at least 30
and not more than 60 days' notice at the option of the Company on or after
February 1, 2003, in whole at any time or in part (in any integral multiple of
$1,000) from time to time, for a redemption price of 104.625% of principal
amount thereof if redeemed on or after February 1, 2003 but prior to February 1,
2004, for a redemption price of 103.083% of principal amount thereof if redeemed
on or after February 1, 2004 but prior to February 1, 2005, for a redemption
price of 101.542% of principal amount thereof if redeemed on or after February
1, 2005 but prior to February 1, 2006,
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and at a redemption price of 100% of the principal amount thereof if redeemed on
or after February 1, 2006, in each case, together with accrued and unpaid
interest to the redemption date.
In addition, if the Company consummates one or more public offerings of
its Common Stock subsequent to the date hereof and on or prior to February 1,
2001, the Company may, at its option, redeem up to 33% of the original
outstanding principal amount of the Securities with the net proceeds of such
offerings at 109.250% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date; PROVIDED, HOWEVER that, immediately
after giving effect to any such redemption not less than 67% of the original
outstanding principal amount of the Securities remains outstanding. As used in
this Section 5 and in Section 8 hereof, the term "original outstanding principal
amount of the Securities" means the aggregate principal amount of Securities
which is outstanding plus the aggregate principal amount of Securities which has
been purchased or redeemed by the Company as of the time of determination.
6. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. On and after the redemption date, interest ceases to accrue on
Securities or portions of them called for redemption.
7. CHANGE OF CONTROL. In the event of a Change of Control (as defined
in the Indenture) with respect to the Company, then each Holder of the
Securities shall have the right, at the Holder's option, to require the Company
to buy such Holder's Securities including any portion thereof which is $1,000 or
any integral multiple thereof on the date (the "Change of Control Repurchase
Date") that is 45 days after the date of the Change of Control Notice at a price
equal to 101% of the principal amount thereof, plus accrued interest to the
Change of Control Repurchase Date.
8. NET WORTH OFFER. In the event that the Company's Net Worth at the
end of each of any two consecutive fiscal quarters is less than $35,000,000 (the
"Minimum Net Worth"), then the Company shall make a Net Worth Offer to all
Holders to acquire on the date (the "Net Worth Repurchase Date") that is 45 days
after the Net Worth Notice, Securities in an aggregate principal amount equal to
10% of the original outstanding principal amount of the Securities (the "Net
Worth Offer Amount"), at a price equal to 100% of the principal amount thereof,
plus accrued interest to the Net Worth Repurchase Date. The Company may credit
against the Net Worth Offer Amount the principal amount of Securities acquired
by the Company through purchase, optional redemption or exchange prior to the
Trigger Date.
9. NET PROCEEDS OFFER. Within 12 months from the date that the Company
or any of its Restricted Subsidiaries makes any Asset Sale, the Net Proceeds
thereof shall, in accordance with Section 4.15 of the Indenture, be reinvested
in Additional Assets or used to repurchase or redeem Debt of the Company which
rank PARI PASSU with the Securities, or Debt of a Restricted Subsidiary of the
Company which is not subordinated to other Debt of such Restricted Subsidiary
(which in each case shall be a permanent reduction of such Debt) or if not so
used
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<PAGE>
within 30 days from the expiration of such 12-month period, to use the remaining
Net Proceeds to make an offer to repurchase Securities at a price equal to 100%
of the principal amount thereof plus accrued interest in accordance with the
procedures set forth in the Indenture (a "Net Proceeds Offer"). Notwithstanding
the preceding sentence, a Net Proceeds Offer made in connection with any Asset
Sale need not be applied in accordance with the preceding sentence, unless and
until the aggregate Net Proceeds for all such Asset Sales in a 12-month period
exceeds $5,000,000.
10. RESTRICTIVE COVENANTS. The Indenture contains certain restrictive
covenants that limit the ability of the Company and its Restricted Subsidiaries
to incur additional indebtedness, pay dividends, make certain other
distributions, repurchase Capital Stock or subordinated indebtedness, create
certain liens, enter into certain transactions with affiliates or apply the net
proceeds from the sale of certain assets.
11. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in registered
form without coupons in denominations of $1,000 and whole multiples of $1,000.
The transfer of Securities may be registered and Securities may be exchanged as
provided in the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents. No service
charge shall be made for any such registration or transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection herewith. The Registrar need not
exchange or register the transfer of any Security selected for redemption in
whole or in part. Also, it need not exchange or register the transfer of any
Securities for a period of 15 days before a selection of Securities to be
redeemed.
12. PERSONS DEEMED OWNERS. The registered Holder of a Security may be
treated as its owner for all purposes.
13. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the
Indenture, the Securities or the Guarantees may be amended with the consent of
the Holders of at least a majority in principal amount of the Securities
outstanding; and any existing default or Even of Default may be waived with the
consent of the Holders of a majority in principal amount of the Securities.
Without the consent of any Securityholder, the Indenture, the Securities or the
Guarantees may be amended to cure any ambiguity, omission, defect or
inconsistency (provided that such amendment does not materially, adversely
affect the rights of any Securityholder) or to provide for uncertificated
Securities in addition to certificated Securities, to comply with Section 5.01
of the Indenture, to make any change that does not materially adversely affect
the rights of any Securityholder, to comply with the qualification of the
Indenture under the Trust Indenture Act, or to reflect a Guarantor ceasing to be
liable on the Guarantees because it is no longer a Subsidiary of the Company.
14. DEFAULTS AND REMEDIES. An Event of Default is: (i) failure to pay
the principal of any Security when such principal becomes due and payable at
maturity, upon acceleration or otherwise (ii) failure to pay interest when due,
and such failure continues for a 30-day period; (iii) a default in the
observance or performance of any other covenant or agreement of the
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Company or the Guarantors in the Security, the Guarantee or the Indenture that
continues for the period and after the notice specified below; (iv) an event of
default shall have occurred under one or more evidences of Debt of the Company
or any of its Restricted Subsidiaries (other than Non-Recourse Debt) with an
outstanding aggregate principal amount of $5,000,000 or more, whether such Debt
now exists or is created hereafter, which event of default (1) consists of the
failure by the Company or any Restricted Subsidiary to make any payment in
respect of such Debt at its final maturity or (2) results in the acceleration of
such Debt which acceleration shall be in effect; (v) any final judgment or
judgments for payment of money in excess of $5,000,000 in the aggregate shall be
rendered against the Company or any of its Restricted Subsidiaries and shall
remain unstayed, unsatisfied or undischarged for the period and after the notice
specified below; (vi) certain events of bankruptcy, insolvency or reorganization
of the Company or Material Subsidiaries; and (vii) any Guarantee of a Material
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). The Company is
required to deliver to the Trustee within 120 days after the end of each fiscal
year of the Company, an officer's certificate stating whether or not the
signatories know of any default by the Company under this Indenture and, if any
default exists, describing such default.
A default under clause (iii) or (v) above is not an Event of Default
until the Trustee or the holders of at least 25% in principal amount of the
Securities then outstanding notify the Company of the default and the Company
does not cure the default within 60 days. The notice must specify the default,
demand that it be remedied and state that the notice is a "Notice of Default."
If the Holders of 25% in principal amount of the Securities then outstanding
request the Trustee to give such notice on their behalf, the Trustee shall do
so.
If an Event of Default occurs (other than due to certain events of
bankruptcy, with respect to the Company) and is continuing, the Trustee, by
notice to the Company, or the Holders of at least 25% in principal amount of the
Securities may declare all the Securities to be due and payable immediately. If
an Event of Default occurs due to certain events of bankruptcy, insolvency or
reorganization, with respect to the Company, such amounts shall be due and
payable without any declaration or act on the part of the Trustee or the Holders
of the Securities. Subject to certain exceptions, the Holders of a majority in
principal amount of the Securities then outstanding by notice to the Trustee may
rescind any declaration of acceleration or waive a Default and its consequences.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in principal amount of the Securities may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or the exercise of any trust or power conferred on the
Trustee. The Trustee may withhold from Securityholders notice of any continuing
default (except a default in payment of principal or interest) if it determines
that withholding notice is in their interests. The Company must furnish an
annual compliance certificate to the Trustee and notify the Trustee upon the
occurrence of a Default.
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<PAGE>
15. TRUSTEE DEALINGS WITH COMPANY. American Stock Transfer & Trust
Company, the Trustee under the Indenture, or any banking institution serving as
successor Trustee thereunder, 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 the Trustee.
16. NO RECOURSE AGAINST OTHERS. A director, officer, controlling
person, employee or stockholder, as such, of the Company or any Guarantor shall
not have any liability for any obligations, covenants or agreements of the
Company or any Guarantor under the Securities or the Indenture or for any claim
based on, in respect of or by reason of such obligations, covenants or
agreements or their creation. Each Securityholder by accepting a Security waives
and releases all such liability. The waiver and releases are part of the
consideration for the issue of the Securities.
17. AUTHENTICATION. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
18. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenant 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).
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND
WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO: Engle Homes,
Inc., 123 N.W. 13th Street, Boca Raton, Florida 33432, Attention: Corporate
Secretary.
A-1-8
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
(Print or type name, address and zip code of assignee)
(Insert Social Security or other identifying number of assignee)
and irrevocably appoint
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
In connection with any transfer of this Security occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act") covering resales of this Security (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) June 12, 2000, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer and that:
[CHECK ONE]
[ ] (a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act provided
by Rule 144A thereunder.
OR
[ ] (b) this Security is being transferred other than in accordance
with (a) above and documents are being furnished which comply
with the conditions of transfer set forth in this Security and
the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Security 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 2.15 of the Indenture shall have
been satisfied.
Dated: Signed:
(Sign exactly as name appears on the other
side of this Security)
Signature Guarantee:
(The signature(s) should be guaranteed by an eligible
Guarantor Institution (Banks, Stock Brokers, Savings and Loan
Associations, and Credit Unions) with membership in an
approved Signature Guarantee Medallion Program pursuant to
S.E.C. Rule 17Ad-15.)
A-1-9
<PAGE>
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security 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
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-1-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.08, 4.09 or 4.15, as the case may be, of the Indenture,
check the box:
[ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.08, 4.09 or 4.15 of the Indenture, state the
amount:
$____________________________________________________
(in an integral multiple of $1,000)
Date: _______________ Signature(s):
(Sign exactly as your name(s) appear(s) on
the other side of this Security)
Signature(s) guaranteed by:
(The signature(s) should be guaranteed by an
Eligible Guarantor Institution (banks, stock
brokers, savings and loan associations, and
credit unions) with membership in an
Approved Signature Guarantee Medallion
Program pursuant to S.E.C. Rule 17Ad-15.)
A-1-11
<PAGE>
GUARANTEE
For value received, the undersigned hereby unconditionally guarantees
to the Holder of this Security the payments of principal of, premium, if any,
and interest on this Security in the amounts and at the time when due and
interest on the overdue principal, premium, if any, and interest, if any, of
this Security, if lawful, and the payment or performance of all other
obligations of the Company under the Indenture or the Securities, to the Holder
of this Security and the Trustee, all in accordance with and subject to the
terms and limitations of this Security, Article 10 of the Indenture and this
Guarantee. This Guarantee will become effective in accordance with Article 10 of
the Indenture and its terms shall be evidenced therein. The validity and
enforceability of any Guarantee shall not be affected by the fact that it is not
affixed to any particular Security.
The obligations of the undersigned to the Holders of Securities and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set forth
in Article 10 of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates.
A-1-12
<PAGE>
This Guarantee is subject to release upon the terms set forth in the Indenture.
ENGLE HOMES, INC.
BANYAN TRAILS, INC.
BILTMORE SOUTH CORP.
ENGLE HOMES/ARIZONA, INC.
ENGLE HOMES/ATLANTA, INC.
ENGLE HOMES/BROWARD, INC.
ENGLE HOMES/COLORADO, INC.
ENGLE HOMES/GULF COAST, INC.
ENGLE HOMES/JACKSONVILLE, INC.
ENGLE HOMES/LAKE BERNADETTE, INC.
ENGLE HOMES/NORTH CAROLINA, INC.
ENGLE HOMES/ORLANDO, INC.
ENGLE HOMES/PALM BEACH, INC.
ENGLE HOMES/PEMBROKE, INC.
ENGLE HOMES/SOUTHWEST FLORIDA, INC.
ENGLE HOMES/TEXAS, INC.
ENGLE HOMES/VIRGINIA, INC.
ENGLE HOMES REALTY, INC.
GREENLEAF HOMES, INC.
PEMBROKE FALLS REALTY, INC.
PREFERRED BUILDERS REALTY, INC.
PREFERRED HOME MORTGAGE COMPANY
ST. TROPEZ AT BOCA GOLF, INC.
UNIVERSAL LAND TITLE, INC.
ENGLE HOMES/ARIZONA CONSTRUCTION, INC.
UNIVERSAL LAND TITLE OF COLORADO, INC.
By:
-----------------------------------
Authorized Officer
A-1-13
<PAGE>
EXHIBIT A-2
[FORM OF SERIES C SECURITY]
REGISTERED $________________
NUMBER
ENGLE HOMES, INC.
................ CUSIP _________
9 1/4% SERIES C SENIOR NOTE DUE 2008
ENGLE HOMES, INC., a Florida corporation (herein called the "Company"),
for value received, hereby promises to pay to __________________________, or
registered assigns, the principal sum of ________________________Dollars on
February 1, 2008, and to pay interest thereon as provided on the reverse hereof,
until the principal hereof is paid or duly provided for.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
The provisions on the back of this certificate are incorporated as if
set forth on the face hereof.
IN WITNESS WHEREOF, ENGLE HOMES, INC. has caused this instrument to be
duly signed under its corporate seal.
[SEAL] ENGLE HOMES, INC.
By:
--------------------------------
[TITLE]
A-2-1
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Trustee
By:
-----------------------------
Signatory
Dated:
A-2-2
<PAGE>
ENGLE HOMES, INC.
9 1/4% SERIES C SENIOR NOTE DUE 2008
1. INTEREST. Engle Homes, Inc., a Florida corporation (the "Company"),
promises to pay interest on the principal amount of this Security at the rate
PER ANNUM shown above. The Company will pay interest semi-annually on February 1
and August 1 of each year, commencing August 1, 1998. Interest on the Securities
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from June 12, 1998. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Securities
(except defaulted interest) to the persons who are registered Holders of
Securities at the close of business on the record date set forth on the face of
this Security next preceding the applicable interest payment date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
However, the Company must pay principal and interest by check payable in such
money. The Company may, at its option, mail an interest check to a Holder's
registered address.
3. PAYING AGENT AND REGISTRAR. Initially, American Stock Transfer &
Trust Company (the "Trustee") will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-registrar without notice.
The Company may act in any such capacity.
4. INDENTURE. The Company issued the Securities under an Indenture
dated as of June 12, 1998 (the "Indenture") between the Company, the Guarantors
party thereto and the Trustee. The terms of the Securities include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb) (the
"Act"), as in effect on the date of the Indenture. The Securities are subject to
all such terms, and Securityholders are referred to the Indenture and the Act
for a statement of such terms. The Securities are general unsecured senior
obligations of the Company limited in aggregate principal amount to $50,000,000
issued on the Issue Date and additional principal amounts issuable thereafter
subject to the terms of the Indenture. Terms used herein which are defined in
the Indenture have the meanings assigned to them in the Indenture.
5. OPTIONAL REDEMPTION. The Securities may be redeemed on at least 30
and not more than 60 days' notice at the option of the Company on or after
February 1, 2003, in whole at any time or in part (in any integral multiple of
$1,000) from time to time, for a redemption price of 104.625% of principal
amount thereof if redeemed on or after February 1, 2003 but prior to February 1,
2004, for a redemption price of 103.083% of principal amount thereof if redeemed
on or after February 1, 2004 but prior to February 1, 2005, for a redemption
price of 101.542% of principal amount thereof if redeemed on or after February
1, 2005 but prior to February 1, 2006,
A-2-3
<PAGE>
and at a redemption price of 100% of the principal amount thereof if redeemed on
or after February 1, 2006, in each case, together with accrued and unpaid
interest to the redemption date.
In addition, if the Company consummates one or more public offerings of
its Common Stock subsequent to the date hereof and on or prior to February 1,
2001, the Company may, at its option, redeem up to 33% of the original
outstanding principal amount of the Securities with the net proceeds of such
offerings at 109.250% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the redemption date; PROVIDED, HOWEVER that, immediately
after giving effect to any such redemption not less than 67% of the original
outstanding principal amount of the Securities remains outstanding. As used in
this Section 5 and in Section 8 hereof, the term "original outstanding principal
amount of the Securities" means the aggregate principal amount of Securities
which is outstanding plus the aggregate principal amount of Securities which has
been purchased or redeemed by the Company as of the time of determination.
6. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. On and after the redemption date, interest ceases to accrue on
Securities or portions of them called for redemption.
7. CHANGE OF CONTROL. In the event of a Change of Control (as defined
in the Indenture) with respect to the Company, then each Holder of the
Securities shall have the right, at the Holder's option, to require the Company
to buy such Holder's Securities including any portion thereof which is $1,000 or
any integral multiple thereof on the date (the "Change of Control Repurchase
Date") that is 45 days after the date of the Change of Control Notice at a price
equal to 101% of the principal amount thereof, plus accrued interest to the
Change of Control Repurchase Date.
8. NET WORTH OFFER. In the event that the Company's Net Worth at the
end of each of any two consecutive fiscal quarters is less than $35,000,000 (the
"Minimum Net Worth"), then the Company shall make a Net Worth Offer to all
Holders to acquire on the date (the "Net Worth Repurchase Date") that is 45 days
after the Net Worth Notice, Securities in an aggregate principal amount equal to
10% of the original outstanding principal amount of the Securities (the "Net
Worth Offer Amount"), at a price equal to 100% of the principal amount thereof,
plus accrued interest to the Net Worth Repurchase Date. The Company may credit
against the Net Worth Offer Amount the principal amount of Securities acquired
by the Company through purchase, optional redemption or exchange prior to the
Trigger Date.
9. NET PROCEEDS OFFER. Within 12 months from the date that the Company
or any of its Restricted Subsidiaries makes any Asset Sale, the Net Proceeds
thereof shall, in accordance with Section 4.15 of the Indenture, be reinvested
in Additional Assets or used to repurchase or redeem Debt of the Company which
rank PARI PASSU with the Securities, or Debt of a Restricted Subsidiary of the
Company which is not subordinated to other Debt of such Restricted Subsidiary
(which in each case shall be a permanent reduction of such Debt) or if not so
used
A-2-4
<PAGE>
within 30 days from the expiration of such 12-month period, to use the remaining
Net Proceeds to make an offer to repurchase Securities at a price equal to 100%
of the principal amount thereof plus accrued interest in accordance with the
procedures set forth in the Indenture (a "Net Proceeds Offer"). Notwithstanding
the preceding sentence, a Net Proceeds Offer made in connection with any Asset
Sale need not be applied in accordance with the preceding sentence, unless and
until the aggregate Net Proceeds for all such Asset Sales in a 12-month period
exceeds $5,000,000.
10. RESTRICTIVE COVENANTS. The Indenture contains certain restrictive
covenants that limit the ability of the Company and its Restricted Subsidiaries
to incur additional indebtedness, pay dividends, make certain other
distributions, repurchase Capital Stock or subordinated indebtedness, create
certain liens, enter into certain transactions with affiliates or apply the net
proceeds from the sale of certain assets.
11. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in registered
form without coupons in denominations of $1,000 and whole multiples of $1,000.
The transfer of Securities may be registered and Securities may be exchanged as
provided in the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents. No service
charge shall be made for any such registration or transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection herewith. The Registrar need not
exchange or register the transfer of any Security selected for redemption in
whole or in part. Also, it need not exchange or register the transfer of any
Securities for a period of 15 days before a selection of Securities to be
redeemed.
12. PERSONS DEEMED OWNERS. The registered Holder of a Security may be
treated as its owner for all purposes.
13. AMENDMENTS AND WAIVERS. Subject to certain exceptions, the
Indenture, the Securities or the Guarantees may be amended with the consent of
the Holders of at least a majority in principal amount of the Securities
outstanding; and any existing default or Even of Default may be waived with the
consent of the Holders of a majority in principal amount of the Securities.
Without the consent of any Securityholder, the Indenture, the Securities or the
Guarantees may be amended to cure any ambiguity, omission, defect or
inconsistency (provided that such amendment does not materially, adversely
affect the rights of any Securityholder) or to provide for uncertificated
Securities in addition to certificated Securities, to comply with Section 5.01
of the Indenture, to make any change that does not materially adversely affect
the rights of any Securityholder, to comply with the qualification of the
Indenture under the Trust Indenture Act, or to reflect a Guarantor ceasing to be
liable on the Guarantees because it is no longer a Subsidiary of the Company.
14. DEFAULTS AND REMEDIES. An Event of Default is: (i) failure to pay
the principal of any Security when such principal becomes due and payable at
maturity, upon acceleration or otherwise (ii) failure to pay interest when due,
and such failure continues for a 30-day period; (iii) a default in the
observance or performance of any other covenant or agreement of the
A-2-5
<PAGE>
Company or the Guarantors in the Security, the Guarantee or the Indenture that
continues for the period and after the notice specified below; (iv) an event of
default shall have occurred under one or more evidences of Debt of the Company
or any of its Restricted Subsidiaries (other than Non-Recourse Debt) with an
outstanding aggregate principal amount of $5,000,000 or more, whether such Debt
now exists or is created hereafter, which event of default (1) consists of the
failure by the Company or any Restricted Subsidiary to make any payment in
respect of such Debt at its final maturity or (2) results in the acceleration of
such Debt which acceleration shall be in effect; (v) any final judgment or
judgments for payment of money in excess of $5,000,000 in the aggregate shall be
rendered against the Company or any of its Restricted Subsidiaries and shall
remain unstayed, unsatisfied or undischarged for the period and after the notice
specified below; (vi) certain events of bankruptcy, insolvency or reorganization
of the Company or Material Subsidiaries; and (vii) any Guarantee of a Material
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). The Company is
required to deliver to the Trustee within 120 days after the end of each fiscal
year of the Company, an officer's certificate stating whether or not the
signatories know of any default by the Company under this Indenture and, if any
default exists, describing such default.
A default under clause (iii) or (v) above is not an Event of Default
until the Trustee or the holders of at least 25% in principal amount of the
Securities then outstanding notify the Company of the default and the Company
does not cure the default within 60 days. The notice must specify the default,
demand that it be remedied and state that the notice is a "Notice of Default."
If the Holders of 25% in principal amount of the Securities then outstanding
request the Trustee to give such notice on their behalf, the Trustee shall do
so.
If an Event of Default occurs (other than due to certain events of
bankruptcy, with respect to the Company) and is continuing, the Trustee, by
notice to the Company, or the Holders of at least 25% in principal amount of the
Securities may declare all the Securities to be due and payable immediately. If
an Event of Default occurs due to certain events of bankruptcy, insolvency or
reorganization, with respect to the Company, such amounts shall be due and
payable without any declaration or act on the part of the Trustee or the Holders
of the Securities. Subject to certain exceptions, the Holders of a majority in
principal amount of the Securities then outstanding by notice to the Trustee may
rescind any declaration of acceleration or waive a Default and its consequences.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in principal amount of the Securities may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or the exercise of any trust or power conferred on the
Trustee. The Trustee may withhold from Securityholders notice of any continuing
default (except a default in payment of principal or interest) if it determines
that withholding notice is in their interests. The Company must furnish an
annual compliance certificate to the Trustee and notify the Trustee upon the
occurrence of a Default.
A-2-6
<PAGE>
15. TRUSTEE DEALINGS WITH COMPANY. American Stock Transfer & Trust
Company, the Trustee under the Indenture, or any banking institution serving as
successor Trustee thereunder, 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 the Trustee.
16. NO RECOURSE AGAINST OTHERS. A director, officer, controlling
person, employee or stockholder, as such, of the Company or any Guarantor shall
not have any liability for any obligations, covenants or agreements of the
Company or any Guarantor under the Securities or the Indenture or for any claim
based on, in respect of or by reason of such obligations, covenants or
agreements or their creation. Each Securityholder by accepting a Security waives
and releases all such liability. The waiver and releases are part of the
consideration for the issue of the Securities.
17. AUTHENTICATION. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
18. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenant 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).
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND
WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO: Engle Homes,
Inc., 123 N.W. 13th Street, Boca Raton, Florida 33432, Attention: Corporate
Secretary.
A-2-7
<PAGE>
ASSIGNMENT FORM
I or we assign and transfer this Security to
(Print or type name, address and zip code of assignee)
(Insert Social Security or other identifying number of assignee)
and irrevocably appoint
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
(Sign exactly as name appears on the other
side of this Security)
Signature Guarantee:
(The signature(s) should be guaranteed by an eligible
Guarantor Institution (banks, stock brokers, savings
and loan associations, and credit unions) with
membership in an Approved Signature Guarantee
Medallion Program pursuant to S.E.C. Rule 17Ad-15.)
A-2-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.08, 4.09 or 4.15, as the case may be, of the Indenture,
check the box:
[ ]
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.08, 4.09 or 4.15 of the Indenture, state the
amount:
$___________________________________________________
(in an integral multiple of $1,000)
Date: ______________ Signature(s):
(Sign exactly as your name(s) appear(s) on
the other side of this Security)
Signature(s) guaranteed by:
(The signature(s) should be guaranteed by an Eligible
Guarantor Institution (banks, stock brokers, savings
and loan associations, and credit unions) with
membership in an Approved Signature Guarantee
Medallion Program pursuant to S.E.C. Rule 17Ad-15.)
A-2-9
<PAGE>
GUARANTEE
For value received, the undersigned hereby unconditionally guarantees
to the Holder of this Security the payments of principal of, premium, if any,
and interest on this Security in the amounts and at the time when due and
interest on the overdue principal, premium, if any, and interest, if any, of
this Security, if lawful, and the payment or performance of all other
obligations of the Company under the Indenture or the Securities, to the Holder
of this Security and the Trustee, all in accordance with and subject to the
terms and limitations of this Security, Article 10 of the Indenture and this
Guarantee. This Guarantee will become effective in accordance with Article 10 of
the Indenture and its terms shall be evidenced therein. The validity and
enforceability of any Guarantee shall not be affected by the fact that it is not
affixed to any particular Security.
The obligations of the undersigned to the Holders of Securities and to
the Trustee pursuant to the Guarantee and the Indenture are expressly set forth
in Article 10 of the Indenture and reference is hereby made to the Indenture for
the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates.
A-2-10
<PAGE>
This Guarantee is subject to release upon the terms set forth in the Indenture.
ENGLE HOMES, INC.
BANYAN TRAILS, INC.
BILTMORE SOUTH CORP.
ENGLE HOMES/ARIZONA, INC.
ENGLE HOMES/ATLANTA, INC.
ENGLE HOMES/BROWARD, INC.
ENGLE HOMES/COLORADO, INC.
ENGLE HOMES/GULF COAST, INC.
ENGLE HOMES/JACKSONVILLE, INC.
ENGLE HOMES/LAKE BERNADETTE, INC.
ENGLE HOMES/NORTH CAROLINA, INC.
ENGLE HOMES/ORLANDO, INC.
ENGLE HOMES/PALM BEACH, INC.
ENGLE HOMES/PEMBROKE, INC.
ENGLE HOMES/SOUTHWEST FLORIDA, INC.
ENGLE HOMES/TEXAS, INC.
ENGLE HOMES/VIRGINIA, INC.
ENGLE HOMES REALTY, INC.
GREENLEAF HOMES, INC.
PEMBROKE FALLS REALTY, INC.
PREFERRED BUILDERS REALTY, INC.
PREFERRED HOME MORTGAGE COMPANY
ST. TROPEZ AT BOCA GOLF, INC.
UNIVERSAL LAND TITLE, INC.
ENGLE HOMES/ARIZONA CONSTRUCTION, INC.
UNIVERSAL LAND TITLE OF COLORADO, INC.
By:
Authorized Officer
A-2-11
<PAGE>
EXHIBIT B
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS
SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE,
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
<PAGE>
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 9 1/4% Senior Notes due February 1, 2008, (the "Securities") of Engle
Homes, Inc.
This Certificate relates to _____ Securities held in* _____ book-entry
or* _____ certificated form by _____ (the "Transferor" ) .
The Transferor:*
[ ] has requested that the Registrar by written order to deliver in
exchange for its beneficial interest in the Global Security held by the
Depositary a Security or Securities in definitive, registered form of authorized
denominations and an aggregate number equal to its beneficial interest in such
Global Security (or the portion thereof indicated above); or
[ ] has requested that the Registrar by written order to exchange or
register the transfer of a Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Indenture relating to the above captioned Securities and the
restrictions on transfers thereof as provided in Section 2.15 of such Indenture,
and that the transfer of this Securities does not require registration under the
Securities Act of 1933, as amended (the "Act") because[*]:
[ ] Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.15(a)(II)(A) or Section
2.15(d)(i)(A) of the Indenture).
[ ] Such Security is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Act), in reliance on Rule 144A or in
accordance with Regulation S under the Act.
[ ] Such Security is being transferred in accordance with Rule 144
under the Act.
[ ] Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act, other than Rule
144A or Rule 144 or Regulation S under the Act. An opinion of counsel to the
effect that such transfer does not require registration under the Act
accompanies this Certificate.
[INSERT NAME OF TRANSFEROR]
By:
Date:
*Check applicable box.
<PAGE>
EXHIBIT D
TRANSFEREE LETTER OF REPRESENTATION
Engle Homes, Inc.
123 N.W. 13th Street, Suite 300
Boca Raton, Florida 33432
Ladies and Gentlemen:
In connection with our proposed purchase of 9 1/4% Senior Notes due
February 1, 2008, (the "Securities") of Engle Homes, Inc. (the "Company") we
confirm that:
1. We understand that the Securities have not been registered
under the Securities Act of 1933, as amended (the "Securities Act")
and, unless so registered, may not be sold except as permitted in the
following sentence. We agree on our own behalf and on behalf of any
investor account for which we are purchasing Securities to offer, sell
or otherwise transfer such Securities prior to the date which is two
years after the later of the date of original issue and the last date
on which the Company or any affiliate of the Company was the owner of
such Securities, or any predecessor thereto (the "Resale Restriction
Termination Date") only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the
Securities Act, (c) so long as the Securities are eligible for resale
pursuant to Rule 144A, under the Securities Act, to a person we
reasonably believe is a qualified institutional buyer under Rule 144A
(a "QIB") that purchases for its own account or for the account of a
QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) to an institutional "accredited investor"
within the meaning of subparagraph (a)(l), (2), (3) or (7) of Rule 501
under the Securities Act that is purchasing for his own account or for
the account of such an institutional "accredited investor," or (e)
pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing
cases to any requirement of law that the disposition of our property or
the property of such investor account or accounts be at all times
within our or their control and to compliance with any applicable state
securities laws. The foregoing restrictions on resale will not apply
subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Securities is proposed to be made pursuant to
clause (e) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in
the form of this letter to the registrar under the Indenture pursuant
to which the Securities were issued (the "Registrar") which shall
provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of subparagraph (a)(l), (2),
(3) or (7) of Rule 501 under the Securities Act and that it is
acquiring such Securities for investment purposes and not for
distribution in violation of the Securities Act. The Registrar and the
Company reserve the right prior to any offer, sale or other transfer
prior to the Resale Restriction Termination Date of the
<PAGE>
EXHIBIT D
Securities pursuant to clause (e) or (f) above to require the delivery
of a written opinion of counsel, certifications, and or other
information satisfactory to the Company and the Registrar.
2. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) purchasing for our own account or for the account of such an
institutional "accredited investor," and we are acquiring the
Securities for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation of the
Securities Act and we have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and
risks of our investment in the Securities, and we and any accounts for
which we are acting are each able to bear the economic risk of our or
its investment for an indefinite period.
3. We are acquiring the Securities purchased by us for our own
account or for one or more accounts as to each of which we exercise
sole investment discretion.
4. You and your counsel are entitled to rely upon this letter
and you are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered
hereby.
Very truly yours,
(Name of Purchaser)
By:
Date:
Upon transfer the Securities would be registered in the name of the new
beneficial owner as follows:
Name:
Address:
Taxpayer ID Number:
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
Dated as of June 12, 1998
by and among
ENGLE HOMES, INC.
THE SUBSIDIARY GUARANTORS
named herein
and
JEFFERIES & COMPANY, INC.,
as Initial Purchaser
$50,000,000
9 1/4% SERIES B SENIOR NOTES DUE FEBRUARY 1, 2008
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
1. Definitions....................................................................................................1
2. Exchange Offer.................................................................................................4
3. Shelf Registration.............................................................................................7
4. Additional Interest............................................................................................8
5. Registration Procedures.......................................................................................10
6. Registration Expenses.........................................................................................17
7. Indemnification...............................................................................................18
8. Rules 144 and 144A............................................................................................21
9. Underwritten Registrations....................................................................................21
10. Miscellaneous................................................................................................22
(a) No Inconsistent Agreements................................................................................22
(b) Adjustments Affecting Registrable Notes...................................................................22
(c) Amendments and Waivers....................................................................................22
(d) Notices...................................................................................................22
(e) Successors and Assigns....................................................................................23
(f) Counterparts..............................................................................................24
(g) Headings..................................................................................................24
(h) Governing Law.............................................................................................24
(i) Severability..............................................................................................24
(j) Notes Held by the Issuers or Their Affiliates.............................................................24
(k) Third Party Beneficiaries.................................................................................24
(1) Entire Agreement..........................................................................................24
</TABLE>
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made and
entered into as of June 12, 1998, by and among Engle Homes, Inc., a Florida
corporation (the "Company"), each of the subsidiaries of the Company listed on
the signature pages hereto (collectively, the "SUBSIDIARY GUARANTORS"), and
Jefferies & Company, Inc. (the "INITIAL PURCHASER").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of June 8, 1998, by and among the Company, the Subsidiary
Guarantors and the Initial Purchaser (the "PURCHASE AGREEMENT") which provides
for, among other things, the issuance and sale to the Initial Purchaser of
$50,000,000 aggregate principal amount of the Company's 9 1/4% Series B Senior
Notes due February 1, 2008 (the "NOTES"). In order to induce the Initial
Purchaser to enter into the Purchase Agreement, the Company and the Subsidiary
Guarantors have agreed to provide the registration rights set forth in this
Agreement for the benefit of the Initial Purchaser and their direct and indirect
transferees and assigns. The execution and delivery of this Agreement is a
condition to the Initial Purchaser's obligation to purchase the Notes under the
Purchase Agreement. The Company and the Subsidiary Guarantors are collectively
referred to herein as the "Issuers."
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
ADDITIONAL INTEREST: See Section 4(a).
ADVICE: See the last paragraph of Section 5.
AGREEMENT: See the first introductory paragraph to this Agreement.
APPLICABLE PERIOD: See Section 2(b).
BUSINESS DAY: A day that is not a Saturday, a Sunday, or a day on which
banking institutions in New York, New York are required to be closed.
COMPANY: See the first introductory paragraph to this Agreement.
EFFECTIVENESS DATE: The 150th day after the Issue Date.
EFFECTIVENESS PERIOD: See Section 3(a).
EVENT DATE: See Section 4(b).
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
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EXCHANGE NOTES: See Section 2(a).
EXCHANGE OFFER: See Section 2(a).
EXCHANGE REGISTRATION STATEMENT: See Section 2(a).
FILING DATE: The 60th day after the Issue Date.
HOLDER: Any registered holder of Registrable Notes.
INDEMNIFIED PERSON: See Section 7(c).
INDEMNIFYING PERSON: See Section 7(c).
INDENTURE: The Indenture, dated as of June 12, 1998, by and among the
Company, the Subsidiary Guarantors and American Stock Transfer & Trust Company,
as trustee, pursuant to which the Notes are being issued, as amended or
supplemented from time to time in accordance with the terms thereof.
INITIAL PURCHASER: See the first introductory paragraph to this
Agreement.
INITIAL SHELF REGISTRATION: See Section 3(a).
INSPECTORS: See Section 5(o).
ISSUE DATE: The date on which $50,000,000 aggregate principal amount of
Notes were sold to the Initial Purchaser pursuant to the Purchase Agreement.
ISSUERS: See the second introductory paragraph to this Agreement.
NASD: National Association of Securities Dealers, Inc.
NOTES: See the second introductory paragraph to this Agreement.
PARTICIPANT: See Section 7(a).
PARTICIPATING BROKER-DEALER: See Section 2(b).
PERSON: An individual, trustee, corporation, partnership, limited
liability company, joint stock company, trust, unincorporated association,
union, business association, firm or other legal entity.
PRIVATE EXCHANGE: See Section 2(b).
PRIVATE EXCHANGE NOTES: See Section 2(b).
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<PAGE>
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
PURCHASE AGREEMENT: See the second introductory paragraph to this
Agreement.
RECORDS: See Section 5(o).
REGISTRABLE NOTES: Each Note upon original issuance thereof and at all
times subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof
is applicable upon original issuance thereof and at all times subsequent thereto
and each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until, in the case of any such Note, Exchange Note or
Private Exchange Note, as the case may be, the earliest to occur of (i) a
Registration Statement (other than, with respect to any Exchange Note as to
which Section 2(c)(iv) hereof is applicable, the Exchange Registration
Statement) covering such Note, Exchange Note or Private Exchange Note, as the
case may be, has been declared effective by the SEC and such Note, Exchange Note
or Private Exchange Note, as the case may be, has been disposed of in accordance
with such effective Registration Statement, (ii) such Note, Exchange Note or
Private Exchange Note, as the case may be, is sold in compliance with Rule 144,
(iii) in the case of any Note, such Note has been exchanged pursuant to the
Exchange Offer for an Exchange Note or Exchange Notes which may be resold
without restriction under state and federal securities laws, or (iv) such Note,
Exchange Note or Private Exchange Note, as the case may be, ceases to be
outstanding for purposes of the Indenture.
REGISTRATION STATEMENT: Any registration statement of the Issuers filed
with the SEC under the Securities Act, including, but not limited to, the
Exchange Registration Statement, that covers any of the Registrable Notes
pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
RULE 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
RULE 144A: Rule 144A promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
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RULE 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
SHELF NOTICE: See Section 2(c).
SHELF REGISTRATION: See Section 3(b).
SUBSEQUENT SHELF REGISTRATION: See Section 3(b).
SUBSIDIARY GUARANTORS: See the first introductory paragraph to this
Agreement.
TIA: The Trust Indenture Act of 1939, as amended.
TRUSTEE: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
which securities of one or more of the issuers are sold to an underwriter for
reoffering to the public.
2. EXCHANGE OFFER
(a) Each of the Issuers agrees to file with the SEC no later than the
Filing Date, an offer to exchange (the "EXCHANGE OFFER") any and all of the
Registrable Notes (other than Private Exchange Notes, if any) for a like
aggregate principal amount of debt securities of the Company, guaranteed by the
Subsidiary Guarantors, which are identical in all material respects to the Notes
(the "EXCHANGE NOTES") (and which are entitled to the benefits of the Indenture
or a trust indenture which is identical in all material respects to the
Indenture (other than such changes to the Indenture or any such identical trust
indenture as are necessary to comply with any requirements of the SEC to effect
or maintain the qualification thereof under the TIA) and which, in either case,
has been qualified under the TIA), except that the Exchange Notes shall have
been registered pursuant to an effective Registration Statement under the
Securities Act and shall contain no restrictive legend thereon. The Exchange
Offer shall be registered under the Securities Act on the appropriate form (the
"EXCHANGE REGISTRATION STATEMENT") and shall comply with all applicable tender
offer rules and regulations under the Exchange Act. Each of the Issuers agrees
to use its best efforts to (x) cause the Exchange Registration Statement to be
declared effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 30 calendar days (or longer if
required by applicable law) after the date that notice of the Exchange Offer is
mailed to Holders; and (z) consummate the Exchange Offer on or prior to the 45th
day following the date on which the Exchange Registration Statement is declared
effective. If after such Exchange Registration Statement is
4
<PAGE>
initially declared effective by the SEC, the Exchange Offer or the issuance of
the Exchange Notes thereunder is interfered with by any stop order, injunction
or other order or requirement of the SEC or any other governmental agency or
court, such Exchange Registration Statement shall be deemed not to have become
effective for purposes of this Agreement. Each Holder who participates in the
Exchange Offer will be required to represent that any Exchange Notes received by
it will be acquired in the ordinary course of its business, that at the time of
the consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Notes in violation of the provisions of the Securities Act, and that such Holder
is not an affiliate of any of the Issuers within the meaning of the Securities
Act. Upon consummation of the Exchange Offer in accordance with this Section 2,
the provisions of this Agreement shall continue to apply, MUTATIS MUTANDIS,
solely with respect to Registrable Notes that are Private Exchange Notes and
Exchange Notes held by Participating Broker-Dealers, and the Issuers shall have
no further obligation to register Registrable Notes (other than Private Exchange
Notes and other than in respect of any Exchange Notes as to which clause
2(c)(iv) hereof applies) pursuant to Section 3 of this Agreement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchaser, which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer (a "PARTICIPATING
BROKER-DEALER"), whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in the
judgment of the Initial Purchaser, represent the prevailing views of the staff
of the SEC. Such "Plan of Distribution" section shall also allow, to the extent
permitted by applicable policies and regulations of the SEC, the use of the
Prospectus by all Persons subject to the prospectus delivery requirements of the
Securities Act, including, to the extent so permitted, all Participating
Broker-Dealers, and include a statement describing the manner in which
Participating Broker-Dealers may resell the Exchange Notes.
Each of the Issuers shall use its best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be lawfully delivered
by all Persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such Persons must comply with such requirements
in order to resell the Exchange Notes, but in no event longer than 180 days (the
"APPLICABLE PERIOD").
If, upon consummation of the Exchange Offer, the Initial Purchaser
holds any Notes acquired by it and having the status of an unsold allotment in
the initial distribution, the Company upon the request of the Initial Purchaser
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to the Initial Purchaser, in exchange (the "PRIVATE
EXCHANGE") for the Notes held by such Initial Purchaser, a like principal amount
of debt securities of the Company, guaranteed by the Subsidiary Guarantors, that
are identical in all material respects to the Exchange Notes except for the
existence of restrictions on transfer thereof under the Securities Act and
securities laws of the several states of the U.S. (the "PRIVATE EXCHANGE NOTES")
(and which are issued pursuant to the same indenture as the Exchange Notes);
5
<PAGE>
PROVIDED, HOWEVER, the Issuers shall not be required to effect such exchange if,
in the written opinion of counsel for the Issuers (a copy of which shall be
delivered to the Initial Purchaser and any Holder affected thereby), such
exchange cannot be effected without registration under the Securities Act. The
Private Exchange Notes shall bear the same CUSIP number as the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes will
accrue from (A) the later of (i) the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or (ii) if the
Notes are surrendered for exchange on a date in a period which includes the
record date for an interest payment date to occur on or after the date of such
exchange and as to which interest will be paid, the date of such interest
payment date or (B) if no interest has been paid on the Notes, from the date of
the original issuance of the Notes.
In connection with the Exchange Offer, the Issuers shall:
(1) mail to each Holder a copy of the Prospectus forming part
of the Exchange Registration Statement, together with an appropriate
letter of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York, which may be the Trustee or an affiliate thereof;
(3) permit Holders to withdraw tendered Registrable Notes at
any time prior to the close of business, New York time, on the last
business day on which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all
applicable laws.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Issuers shall:
(1) accept for exchange all Registrable Notes validly tendered
and not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange, as the case may be;
(2) deliver to the Trustee for cancellation all Registrable
Notes so accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to
each Holder tendering such Registrable Notes, Exchange Notes or Private
Exchange Notes, as the case may be, equal in principal amount to the
Notes of such Holder so accepted for exchange.
The Exchange Offer and the Private Exchange shall be subject to the
following conditions: (i) the Exchange Offer or the Private Exchange, as the
case may be, does not violate applicable law or any applicable interpretation of
the staff of the SEC, (ii) no action or proceeding is instituted or threatened
in any court or by any governmental agency which might
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<PAGE>
materially impair the ability of the Issuers to proceed with the Exchange Offer
or the Private Exchange and no material adverse development has occurred in any
existing action or proceeding with respect to the Issuers and (iii) all
governmental approvals have been obtained, which approvals the Issuers deem
necessary for the consummation of the Exchange Offer or Private Exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event will provide that the Exchange Notes will not
be subject to the transfer restrictions set forth in the Indenture and that the
Exchange Notes, the Private Exchange Notes and the Notes, if any, will vote and
consent together on all matters as one class and that none of the Exchange
Notes, the Private Exchange Notes or the Notes, if any, will have the right to
vote or consent as a separate class on any matter.
(c) At the Company's discretion, the Company may also offer to exchange
Existing Senior Notes (as defined in the Indenture) for Exchange Notes pursuant
to the Exchange Offer Registration Statement.
(d) If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the SEC, the Issuers are not permitted to effect
an Exchange Offer, (ii) the Exchange Offer is not consummated within 180 days of
the Issue Date, (iii) any holder of Private Exchange Notes so requests in
writing to the Issuers within 120 days after the consummation of the Exchange
Offer or (iv) in the case of any Holder that participates in the Exchange Offer,
such Holder does not receive Exchange Notes on the date of the exchange that may
be sold without restriction under state and federal securities laws (other than
due solely to the status of such Holder as an affiliate of any of the Issuers
within the meaning of the Securities Act) and so notifies the Company within 60
days after the consummation of the Exchange Offer and providing a reasonable
basis for its conclusions, in the case of each of clauses (i)-(iv), then the
Issuers shall promptly deliver to the Holders and the Trustee written notice
thereof (the "SHELF NOTICE") and shall file a Shelf Registration pursuant to
Section 3.
3. SHELF REGISTRATION
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) SHELF REGISTRATION. The Issuers shall as promptly as reasonably
practicable file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Notes (the "INITIAL SHELF REGISTRATION"). If the Issuers shall not have yet
filed the Exchange Registration Statement, each of the Issuers shall use its
best efforts to file with the SEC the Initial Shelf Registration on or prior to
the Filing Date and shall use its best efforts to cause such Initial Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date. Otherwise, each of the Issuers shall use its best
efforts to file with the SEC the Initial Shelf Registration within 30 days of
the delivery of the Shelf Notice and shall use its best efforts to cause such
Shelf Registration to be declared effective under the Securities Act as promptly
as practicable thereafter. The Initial Shelf Registration shall be on Form S-l
or another appropriate form permitting registration of such
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<PAGE>
Registrable Notes for resale by Holders in the manner or manners designated by
them (including, without limitation, one or more underwritten offerings). The
Issuers shall not permit any securities other than the Registrable Notes to be
included in any Shelf Registration (as defined below). The Issuers shall use
their best efforts to keep the Initial Shelf Registration continuously effective
under the Securities Act until the date which is 36 months from the effective
date of such Initial Shelf Registration (subject to extension pursuant to the
last paragraph of Section 5 hereof) (the "EFFECTIVENESS PERIOD"), or such
shorter period ending when (i) all Registrable Notes covered by the Initial
Shelf Registration have been sold in the manner set forth and as contemplated in
the Initial Shelf Registration or (ii) a Subsequent Shelf Registration (as
defined below) covering all of the Registrable Notes has been declared effective
under the Securities Act.
(b) SUBSEQUENT SHELF REGISTRATIONS. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason at
any time during the Effectiveness Period (other than because of the sale of all
of the securities registered thereunder), each of the Issuers shall use its best
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 45 days of such cessation
of effectiveness amend such Shelf Registration in a manner to obtain the
withdrawal of the order suspending the effectiveness thereof, or file an
additional "shelf" Registration Statement pursuant to Rule 415 covering all of
the Registrable Notes (a "SUBSEQUENT SHELF REGISTRATION"). If a Subsequent Shelf
Registration is filed, each of the Issuers shall use its best efforts to cause
the Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Subsequent Shelf Registration
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the Initial
Shelf Registration or any Subsequent Shelf Registrations was previously
continuously effective. As used herein the term "SHELF REGISTRATION" means the
Initial Shelf Registration and any Subsequent Shelf Registration.
(c) SUPPLEMENTS AND AMENDMENTS. The Issuers shall promptly supplement
and amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Shelf Registration or by any underwriter of such Registrable
Notes.
4. ADDITIONAL INTEREST
(a) The Issuers and the Initial Purchaser agree that the Holders of
Registrable Notes will suffer damages if the Issuers fail to fulfill their
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuers, jointly and severally, agree to pay, as liquidated damages,
additional interest on the Notes ("ADDITIONAL INTEREST") under the circumstances
and to the extent set forth below (each of which shall be given independent
effect):
(i) if the Exchange Registration Statement has not been filed
on or prior to the Filing Date, then commencing on the day after the
Filing Date, Additional Interest shall accrue on the Notes over and
above the stated interest at a rate of 0.50% per annum for
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<PAGE>
the first 90 days immediately following the Filing Date, such
Additional Interest rate increasing by an additional 0.50% per annum at
the beginning of each subsequent 90-day period;
(ii) if the Exchange Registration Statement is not declared
effective on or prior to the Effectiveness Date, then commencing on the
day after the Effectiveness Date, Additional Interest shall accrue on
the Notes over and above the stated interest at a rate of 0.50% per
annum for the first 90 days immediately following the day after the
Effectiveness Date, such Additional Interest rate increasing by an
additional 0.50% per annum at the beginning of each subsequent 90-day
period; and
(iii) if (A) the Issuers have not exchanged Exchange Notes for
all Notes validly tendered in accordance with the terms of the Exchange
Offer on or prior to the 60th day after the date on which the Exchange
Registration Statement is declared effective or (B) the Initial Shelf
Registration, if required to be filed hereunder, is not declared
effective on or prior to the 180th day after the Issue Date or (C) if
applicable, a Shelf Registration has been declared effective and such
Shelf Registration ceases to be effective at any time during the
Effectiveness Period, then Additional Interest shall accrue on the
Notes over and above the stated interest at a rate of 0.50% per annum
for the first 90 days commencing on the (x) 60th day after the date on
which the Exchange Registration Statement is declared effective, in the
case of (A) or (B) above, or (y) the day such Shelf Registration ceases
to be effective in the case of (C) above, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each
such subsequent 90-day period;
PROVIDED, HOWEVER, that the Additional Interest rate on the Notes may not exceed
at any one time in the aggregate 1.5% per annum; and PROVIDED FURTHER, that (1)
upon the filing of the Exchange Registration Statement (in the case of (i)
above), (2) upon the effectiveness of the Exchange Registration Statement (in
the case of (ii) above), or (3) upon the exchange of Exchange Notes for all
Notes tendered (in the case of (iii)(A) above), upon the effectiveness of the
Initial Shelf Registration (in the case of (iii)(B) above) or upon the
effectiveness of a Shelf Registration which had ceased to remain effective (in
the case of (iii)(C) above), Additional Interest on the Notes as a result of
such clause (or the relevant subclause thereof), as the case may be, shall cease
to accrue.
(b) The Issuers shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "EVENT DATE"). Any amounts of Additional
Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be
payable semi-annually by wire transfer of immediately available funds or by
federal funds check on each regular interest payment date specified in the
Indenture (to the Holders of record on the regular record date therefor
(specified in the Indenture) immediately preceding such dates), commencing with
the first such regular interest payment date occurring after any such Additional
Interest commences to accrue, subject to Section 2.17 of the Indenture with
respect to defaulted interest. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Notes, multiplied by a fraction, the numerator of which
is the number of days such Additional Interest
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rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360.
5. REGISTRATION PROCEDURES
In connection with the filing of any Registration Statement pursuant to
Section 2 or 3 hereof, the Issuers shall effect such registrations to permit the
sale of such securities covered thereby in accordance with the intended method
or methods of disposition thereof, and pursuant thereto and in connection with
any Registration Statement filed by the Issuers hereunder, the Issuers shall:
(a) Prepare and file with the SEC prior to the Filing Date,
the Exchange Registration Statement or if the Exchange Registration
Statement is not filed because of the circumstances contemplated by
Section 2(c)(i), a Shelf Registration as prescribed by Section 2 or 3,
and use their best efforts to cause each such Registration Statement to
become effective and remain effective as provided herein; PROVIDED
that, if (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, before filing any Registration Statement
or Prospectus or any amendments or supplements thereto, the Issuers
shall, if requested, furnish to and afford the Holders of the
Registrable Notes to be registered pursuant to such Shelf Registration
or each such Participating Broker-Dealer, as the case may be, covered
by such Registration Statement, their counsel and the managing
underwriters, if any, a reasonable opportunity to review copies of all
such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in
each case at least five business days prior to such filing). The
Issuers shall not file any such Registration Statement or Prospectus or
any amendments or supplements thereto if the Holders of a majority in
aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or any such Participating Broker-Dealer, as the
case may be, their counsel, or the managing underwriters, if any, shall
reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be;
cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with the provisions of
the Securities Act and the Exchange Act applicable to it with respect
to the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and
with respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such Prospectus. The Company
shall be deemed not to have used its best efforts to keep a
Registration
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Statement effective during the Applicable Period if it voluntarily
takes any action that would result in selling Holders of the
Registrable Notes covered thereby or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Registrable
Notes or such Exchange Notes during that period unless such action is
required by applicable law or unless the Company complies with this
Agreement, including, without limitation, the provisions of paragraph
5(k) hereof and the last paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant to
Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period from whom the Company has received written notice that it will
be a Participating Broker-Dealer in the Exchange Offer, notify the selling
Holders of Registrable Notes, or each such Participating Broker-Dealer, as the
case may be, their counsel and the managing underwriters, if any, promptly (but
in any event within two business days), and confirm such notice in writing, (i)
when a Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective (including in such notice a
written statement that any Holder may, upon request, obtain, without charge, one
conformed copy of such Registration Statement or post-effective amendment
including financial statements and schedules, documents incorporated or deemed
to be incorporated by reference and exhibits), (ii) of the issuance by the SEC
of any stop order suspending the effectiveness of a Registration Statement or of
any order preventing or suspending the use of any Prospectus or the initiation
of any proceedings for that purpose, (iii) if at any time when a prospectus is
required by the Securities Act to be delivered in connection with sales of the
Registrable Notes the representations and warranties of the Issuers contained in
any agreement (including any underwriting agreement) contemplated by Section
5(n) hereof cease to be true and correct, (iv) of the receipt by the Issuers of
any notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, (v) of the happening of any
event, the existence of any condition or any information becoming known that
makes any statement made in such Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in, or
amendments or supplements to, such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (vi) of any of
the Issuers' reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.
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(d) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, use their best efforts to
prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use
of a Prospectus or suspending the qualification (or exemption from
qualification) of any of the Registrable Notes or the Exchange Notes to
be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use their best
efforts to obtain the withdrawal of any such order at the earliest
possible date.
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Registrable Notes being
sold in connection with an underwritten offering, (i) promptly as
practicable incorporate in a prospectus supplement or post-effective
amendment such information or revisions to information therein relating
to such underwriters or selling Holders as the managing underwriters,
if any, or such Holders or their counsel reasonably request to be
included or made therein and (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as
practicable after the Issuers have received notification of the matters
to be incorporated in such prospectus supplement or post-effective
amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, furnish to each selling
Holder of Registrable Notes and to each such Participating
Broker-Dealer who so requests and to counsel and each managing
underwriter, if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and
schedules, and, if requested, all documents incorporated or deemed to
be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, deliver to each selling
Holder of Registrable Notes or each such Participating Broker-Dealer,
as the case may be, their respective counsel, and the underwriters, if
any, without charge, as many copies of the Prospectus and each
amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject
to the last paragraph of this Section 5, each Issuer hereby consents to
the use of such Prospectus and each amendment or supplement thereto by
each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the underwriters
or agents, if any, and dealers (if any), in connection with the
offering and sale of the Registrable Notes covered by, or the sale by
Participating Broker-Dealers of the Exchange Notes pursuant to, such
Prospectus and any amendment or supplement thereto.
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(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Notes during the Applicable Period, to use their best efforts to
register or qualify, and to cooperate with the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case
may be, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Notes or
Exchange Notes, as the case may be, for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United
States as any selling Holder, Participating Broker-Dealer, or the
managing underwriter or underwriters, if any, reasonably request in
writing; PROVIDED that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered other than through an
underwritten offering, the Issuers agree to cause their counsel to
perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep
each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to
be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions
of the Exchange Notes held by Participating Broker-Dealers or the
Registrable Notes covered by the applicable Registration Statement;
PROVIDED that none of the Issuers shall be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or
(C) subject itself to taxation in excess of a nominal dollar amount in
any such jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes
to be sold, which certificates shall not bear any restrictive legends
and shall be in a form eligible for deposit with The Depository Trust
Company; and enable such Registrable Notes to be in such denominations
and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) Use their best efforts to cause the Registrable Notes
covered by any Registration Statement to be registered with or approved
by such governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof or the underwriters, if any, to
consummate the disposition of such Registrable Notes, except as may be
required solely as a consequence of the nature of such selling Holder's
business, in which case each of the Issuers will cooperate in all
reasonable respects with the filing of such Registration Statement and
the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, upon the occurrence of any
event
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contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as
practicable prepare and (subject to Section 5(a) hereof) file with the
SEC, at the joint and several expense of each of the Issuers, a
supplement or post-effective amendment to the Registration Statement or
a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, or file any other
required document so that, as thereafter delivered to the purchasers of
the Registrable Notes being sold thereunder or to the purchasers of the
Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(l) Use their best efforts to cause the Registrable Notes
covered by a Registration Statement to be rated with the appropriate
rating agencies, if so requested by the Holders of a majority in
aggregate principal amount of Registrable Notes covered by such
Registration Statement or the managing underwriter or underwriters, if
any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with printed certificates for the Registrable Notes in a form eligible
for deposit with The Depository Trust Company and (ii) provide a CUSIP
number for the Registrable Notes.
(n) In connection with an underwritten offering of Registrable
Notes pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings of debt securities
similar to the Notes and take all such other actions as are reasonably
requested by the managing underwriter or underwriters in order to
expedite or facilitate the registration or the disposition of such
Registrable Notes and, in such connection, (i) make such
representations, warranties to, and covenants with, the underwriters,
with respect to the business of the Issuers and their respective
subsidiaries and the Registration Statement, Prospectus and documents,
if any, incorporated or deemed to be incorporated by reference therein,
in each case, as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, and
confirm the same in writing if and when requested; (ii) obtain the
opinion of counsel to the Issuers and updates thereof in form and
substance reasonably satisfactory to the managing underwriter or
underwriters, addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings of
debt securities similar to the Notes and such other matters as may be
reasonably requested by underwriters; (iii) obtain "cold comfort"
letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters from the
independent certified public accountants of the Issuers (and, if
necessary, any other independent certified public accountants of any
subsidiary of any of the Issuers or of any business acquired by any of
the Issuers for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed
to each of the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings of debt securities
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<PAGE>
similar to the Notes and such other matters as reasonably requested by
the managing underwriter or underwriters; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in
Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate principal amount of Registrable
Notes covered by such Registration Statement and the managing
underwriter or underwriters or agents) with respect to all parties to
be indemnified pursuant to said Section. The above shall be done at
each closing under such underwriting agreement, or as and to the extent
required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Notes being sold,
or each such Participating Broker-Dealer, as the case may be, any
underwriter participating in any such disposition of Registrable Notes,
if any, and any attorney, accountant or other agent retained by any
such selling Holder or each such Participating Broker-Dealer, as the
case may be, or underwriter (collectively, the "INSPECTORS"), at the
offices where normally kept, during reasonable business hours, all
financial and other records and pertinent corporate documents of the
Issuers and their respective subsidiaries (collectively, the "RECORDS")
as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers,
directors and employees of the Issuers and their respective
subsidiaries to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement. Such Records
shall be kept confidential by each Inspector and shall not be disclosed
by the Inspectors unless (i) the disclosure of such Records is
necessary to avoid or correct a material misstatement or omission in
such Registration Statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. Each selling Holder of such Registrable Notes and each
such Participating Broker-Dealer will be required to agree that
information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Issuers unless and until
such is made generally available to the public. Each selling Holder of
such Registrable Notes and each such Participating Broker-Dealer will
be required to further agree that it will, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Issuers and allow the Issuers to
undertake appropriate action to prevent disclosure of the Records
deemed confidential at their expense.
(p) Provide an indenture trustee for the Registrable Notes or
the Exchange Notes, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a), as the case may be, to be
qualified under the TIA not later than the effective date of the
Exchange Offer or the first Registration Statement relating to the
Registrable Notes; and in connection therewith, cooperate with the
trustee under any such indenture and the Holders of the Registrable
Notes, to effect such changes to such indenture as may be required for
such indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use its best efforts to cause such trustee to
execute, all documents as
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may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such indenture to
be so qualified in a timely manner.
(q) Comply with all applicable rules and regulations of the
SEC and make generally available to its security holders earnings
statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period
is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Notes are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month
periods.
(r) Upon consummation of the Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Issuers, in a form
customary for underwritten transactions, addressed to the Trustee for
the benefit of all Holders of Registrable Notes participating in the
Exchange Offer or the Private Exchange, as the case may be, that the
Exchange Notes or the Private Exchange Notes, as the case may be, and
the related indenture constitute legally valid and binding obligations
of each of the Issuers, enforceable against each of the Issuers in
accordance with their respective terms subject to customary exceptions
and qualifications.
(s) If the Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Issuers (or to such other Person as directed by the Issuers) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Issuers shall mark, or caused to be marked, on such
Registrable Notes that such Registrable Notes are being canceled in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be; in no event shall such Registrable Notes be marked as paid
or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and each underwriter, if any, participating
in the disposition of such Registrable Notes and their respective
counsel in connection with any filings required to be made with the
NASD.
(u) Use their best efforts to take all other steps reasonably
necessary to effect the registration of the Registrable Notes covered
by a Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Issuers such information
regarding such seller and the distribution of such Registrable Notes as the
Issuers may, from time to time, reasonably request. The Issuers may exclude from
such registration the Registrable Notes of any seller who fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Issuers all
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information required to be disclosed in order to make the information previously
furnished to the Issuers by such seller not materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Issuers of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Notes covered by a Registration
Statement and such Participating Broker Dealer will forthwith discontinue
disposition of such Exchange Notes pursuant to any Prospectus and, in each case,
forthwith discontinue dissemination of such Prospectus until such Holder's or
Participating Broker-Dealer's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(k), or until it is advised in
writing (the "Advice") by the Issuers that the use of the applicable Prospectus
may be resumed, and has received copies of any amendments or supplements thereto
and, if so directed by the Issuers, such Holder or Participating Broker-Dealer,
as the case may be, will deliver to the Issuers all copies, other than permanent
file copies, then in such Holder's or Participating Broker-Dealer's possession,
of the Prospectus covering such Registrable Securities current at the time of
the receipt of such notice. In the event the Issuers shall give any such notice,
each of the Effectiveness Period and the Applicable Period shall be extended by
the number of days during such periods from and including the date of the giving
of such notice to and including the date when each seller of Registrable Notes
covered by such Registration Statement or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k) or
(y) the Advice.
6. REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers, jointly and
severally, whether or not the Exchange Offer or a Shelf Registration is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Registrable Notes or Exchange
Notes and determination of the eligibility of the Registrable Notes or Exchange
Notes for investment under the laws of such jurisdictions (x) where the holders
of Registrable Notes are located, in the case of the Exchange Notes, or (y) as
provided in Section 5(h) hereof, in the case of Registrable Notes or Exchange
Notes to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Notes or Exchange Notes in a form eligible
for deposit with The Depository Trust Company and of printing prospectuses if
the printing of prospectuses is requested by the managing underwriter or
underwriters, if any, or by the Holders of a majority in aggregate principal
amount of the Registrable Notes included in any Registration Statement or by any
Participating Broker-Dealer during the Applicable Period, as the case may be,
(iii) reasonable messenger, telephone and delivery expenses incurred in
connection with the Exchange Registration Statement and any
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Shelf Registration, (iv) fees and disbursements of counsel for the Issuers and
reasonable fees and disbursements of special counsel for the sellers of
Registrable Notes (subject to the provisions of Section 6(b)), (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(n)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(vi) rating agency fees, (vii) Securities Act liability insurance, if the
Issuers desire such insurance, (viii) fees and expenses of all other Persons
retained by the Issuers, (ix) internal expenses of the Issuers (including,
without limitation, all salaries and expenses of officers and employees of the
Issuers performing legal or accounting duties), (x) the expense of any annual
audit, (xi) the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange and (xii) the expenses
relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, securities sales agreements, indentures and
any other documents necessary in order to comply with this Agreement.
(b) In connection with any Shelf Registration hereunder, the Issuers,
jointly and severally, shall reimburse the Holders of the Registrable Notes
being registered in such registration for the fees and disbursements, not to
exceed $25,000, of not more than one counsel (in addition to appropriate local
counsel) chosen by the Holders of a majority in aggregate principal amount of
the Registrable Notes to be included in such Shelf Registration and other
out-of-pocket expenses of Holders of Registrable Notes incurred in connection
with the registration and sale of Registrable Notes.
7. INDEMNIFICATION
(a) Each of the Issuers, jointly and severally, agrees to indemnify and
hold harmless each Holder of Registrable Notes and each Participating
Broker-Dealer selling Exchange Notes during the Applicable Period, the officers
and directors of each such Person, and each Person, if any, who controls any
such Person within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "PARTICIPANT"), from and against any and
all losses, claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other reasonable expenses actually incurred in
connection with any suit, action or proceeding or any claim asserted) caused by,
arising out of or based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement (as amended
or supplemented if the Issuers shall have furnished any amendments or
supplements thereto) or caused by, arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (as amended or supplemented if the Issuers shall have furnished any
amendments or supplements thereto) or caused by, arising out of or based upon
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Participant furnished to the Issuers
in writing by or on behalf of such Participant expressly for use therein;
PROVIDED, HOWEVER, that the Company will not be liable if such untrue statement
or omission or alleged untrue statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus or any amendment or
18
<PAGE>
supplement thereto and the Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission of a material fact
that was the subject matter of the related proceeding and any such loss,
liability, claim, damage or expense suffered or incurred by the Participants
resulted from any action, claim or suit by any Person who purchased Registrable
Notes or Exchange Notes which are the subject thereof from such Participant and
it is established in the related proceeding that such Participant failed to
deliver or provide a copy of the Prospectus (as amended or supplemented) to such
Person with or prior to the confirmation of the sale of such Registrable Notes
or Exchange Notes sold to such Person if required by applicable law, unless such
failure to deliver or provide a copy of the Prospectus (as amended or
supplemented) was a result of noncompliance by the Company with Section 5 of
this Agreement.
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Issuers, their respective directors and officers and each
Person who controls any of the Issuers within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuers to each Participant, but only with
reference to information relating to such Participant furnished to the Issuers
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "INDEMNIFIED PERSON") shall promptly
notify the Person against whom such indemnity may be sought (the "INDEMNIFYING
PERSON") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; PROVIDED, HOWEVER, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise (unless and only to the extent that such failure
directly results in the loss or compromise of any material rights or defenses by
the Indemnifying Person and the Indemnifying Person was not otherwise aware of
such action or claim). In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying
Person and the Indemnified Person shall have mutually agreed in writing to the
contrary, (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person or (iii) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that, unless there
is a conflict among Indemnified Persons, the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed promptly after receipt of the invoice therefor as
they are
19
<PAGE>
incurred. Any such separate firm for the Participants and such control Persons
of Participants shall be designated in writing by Participants who sold a
majority in interest of Registrable Notes sold by all such Participants and any
such separate firm for the Issuers, their directors, their officers and such
control Persons of the Issuers shall be designated in writing by the Company.
The Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its prior written consent, but if settled with such consent or
if there is a final non-appealable judgment for the plaintiff for which the
Indemnified Person is entitled to indemnification pursuant to this Agreement,
the Indemnifying Person agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an Indemnified Person
shall have requested an Indemnifying Person to reimburse the Indemnified Person
for reasonable fees and expenses actually incurred by counsel as contemplated by
the third sentence of this paragraph, the Indemnifying Person agrees that it
shall be liable for any settlement of any proceeding effected without its prior
written consent if (i) such settlement is entered into more than 30 days after
receipt by such Indemnifying Person of the aforesaid request and (ii) such
Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement; PROVIDED,
HOWEVER, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying
Person is contesting, in good faith, the request for reimbursement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in respect
of which any Indemnified Person is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Person, unless such
settlement (A) includes an unconditional release of such indemnified Person, in
form and substance satisfactory to such Indemnified Person, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of an Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable (other than by reason of the
exceptions specifically provided therein) to, or insufficient to hold harmless,
an Indemnified Person in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraphs, in
lieu of indemnifying such Indemnified Person thereunder and in order to provide
for just and equitable contribution, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims, damages
or liabilities in such proportion as is appropriate to reflect (i) the relative
benefits received by the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other from the offering of the Registrable
Notes or Exchange Notes, as the case may be or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, not only such
relative benefits but also the relative fault of the Indemnifying Person or
Persons on the one hand and the Indemnified Person or Persons on the other in
connection with the statements or omissions (or alleged statements or omissions)
that resulted in such losses, claims, damages or liabilities (or actions in
respect thereof) as well as any other relevant equitable considerations. The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuers on the one hand or by the Participants or such other
Indemnified Person, as the case
20
<PAGE>
may be, on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission and
any other equitable considerations appropriate under the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by PRO RATA allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this Section
7 will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. RULES 144 AND 144A
Each of the Issuers covenants that it will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner and, if at any time
it is not required to file such reports, it will, upon the request of any Holder
of Registrable Notes, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 and Rule 144A. Each of the
Issuers further covenants, for so long as any Registrable Notes remain
outstanding, to make available to any Holder or beneficial owner of Registrable
Notes in connection with any sale thereof and any prospective purchaser of such
Registrable Notes from such Holder or beneficial owner, the information required
by Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to Rule 144A.
9. UNDERWRITTEN REGISTRATIONS
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis
21
<PAGE>
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
10. MISCELLANEOUS
(a) NO INCONSISTENT AGREEMENTS . None of the Issuers has entered, as of
the date hereof, and none of the Issuers shall enter, after the date of this
Agreement, into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof. None of the Issuers
has entered and none of the Issuers will enter into any agreement with respect
to any of its securities which will grant to any Person piggy-back rights with
respect to a Registration Statement.
(b) ADJUSTMENTS AFFECTING REGISTRABLE NOTES . Neither the Company nor
the Subsidiary Guarantors shall, directly or indirectly, take any action with
respect to the Registrable Notes as a class that would adversely affect the
ability of the Holders of Registrable Notes to include such Registrable Notes in
a registration undertaken pursuant to this Agreement.
(c) AMENDMENTS AND WAIVERS . The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (A) the Holders of not less than a majority in aggregate principal
amount of the then outstanding Registrable Notes and (B) in circumstances that
would adversely affect Participating Broker-Dealers, the Participating
Broker-Dealers holding not less than a majority in aggregate principal amount of
the Exchange Notes held by all Participating Broker-Dealers; PROVIDED, HOWEVER,
that Section 7 and this Section 10(c) may not be amended, modified or
supplemented without the prior written consent of each Holder and each
Participating Broker-Dealer (including any Person who was a Holder or
Participating Broker-Dealer of Registrable Notes or Exchange Notes, as the case
may be, disposed of pursuant to any Registration Statement). Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being tendered pursuant to the Exchange Offer or sold
pursuant to a Registration Statement and that does not directly or indirectly
affect, impair, limit or compromise the rights of other Holders of Registrable
Notes may be given by Holders of at least a majority in aggregate principal
amount of the Registrable Notes being tendered or being sold by such Holders
pursuant to such Registration Statement.
(d) NOTICES . All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
1. if to a Holder of Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or
Participating Broker-Dealer, as the case may be, set forth on the
records of the registrar under the Indenture, with a copy in like
manner to the Initial Purchaser as follows:
22
<PAGE>
Jefferies & Company, Inc.
11100 Santa Monica Boulevard - 10th Floor
Los Angeles, California 90025
Facsimile No.: (310) 575-5165
Attention: Corporate Finance Department
with a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Facsimile No.: (713) 615-5282
Attention: Michael P. Finch
2. if to the Initial Purchaser, at the address specified
in Section 10(d)(1);
3. if to an Issuer, as follows:
Engle Homes, Inc.
123 N.W. 13th Street, Suite 300
Boca Raton, Florida 33432
Facsimile No.: (561) 238-5634
Attention: Chief Executive Officer
with copies to:
Greenberg Traurig Hoffman Lipoff Rosen & Quentel,
P.A.
1221 Brickell Avenue
Miami, Florida 33131
Facsimile No.: (305) 579-0717
Attention: Bruce E. Macdonough
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed, one business day after
being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
(e) SUCCESSORS AND ASSIGNS . This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto
and the Holders; PROVIDED,
23
<PAGE>
HOWEVER, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless such successor or assign holds
Registrable Notes.
(f) COUNTERPARTS . This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) HEADINGS . The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(H) GOVERNING LAW . THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) SEVERABILITY . If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(j) NOTES HELD BY THE ISSUERS OR THEIR AFFILIATES . Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Issuers or their affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
(k) THIRD PARTY BENEFICIARIES . Holders of Registrable Notes and
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(1) ENTIRE AGREEMENT . This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Initial Purchaser on the
one hand and the Issuers on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
24
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ENGLE HOMES, INC.
By: /S/ DAVID SHAPIRO
------------------------------
Name: David Shapiro
Title: Vice President
BANYAN TRAILS, INC.
BILTMORE SOUTH CORP.
ENGLE HOMES/ARIZONA, INC.
ENGLE HOMES/ATLANTA, INC.
ENGLE HOMES/BROWARD, INC.
ENGLE HOMES/COLORADO, INC.
ENGLE HOMES/GULF COAST, INC.
ENGLE HOMES/JACKSONVILLE, INC.
ENGLE HOMES/LAKE BERNADETTE, INC.
ENGLE HOMES/NORTH CAROLINA, INC.
ENGLE HOMES/ORLANDO, INC.
ENGLE HOMES/PALM BEACH, INC.
ENGLE HOMES/PEMBROKE, INC.
ENGLE HOMES/SOUTHWEST FLORIDA, INC.
ENGLE HOMES/TEXAS, INC.
ENGLE HOMES/VIRGINIA, INC.
ENGLE HOMES REALTY, INC.
GREENLEAF HOMES, INC.
PEMBROKE FALLS REALTY, INC.
PREFERRED BUILDERS REALTY, INC.
PREFERRED HOME MORTGAGE COMPANY
ST. TROPEZ AT BOCA GOLF, INC.
UNIVERSAL LAND TITLE, INC.
ENGLE HOMES/ARIZONA CONSTRUCTION, INC.
UNIVERSAL LAND TITLE OF COLORADO, INC.
By: /S/ DAVID SHAPIRO
------------------------------
Name: David Shapiro
Title: Vice President
JEFFERIES & COMPANY, INC.
By: /S/ ROBERT M. WERLE
------------------------------
Name: Robert M. Werle
Title: Managing Director
EXHIBIT 5.1
July 14, 1998
Engle Homes, Inc.
123 N.W. 13th Street
Boca Raton, Florida 33432
Ladies and Gentlemen:
We have acted as special counsel to Engle Homes, Inc., a Florida
corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form S-4, including the Prospectus constituting a part
thereof (the "Registration Statement"), to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act"), relating to an offer to exchange (the "Exchange Offer") the
Company's 9 1/4% Series C Senior Notes due 2008 (the "Exchange Notes") for an
equal principal amount of the Company's outstanding 9 1/4% Senior Notes due 2008
(the "Existing Notes") and 9 1/4% Series B Senior Notes due 2008 (the "Private
Notes" and together with the Existing Notes, the "Old Notes"). The Exchange
Notes will be guaranteed (the "Guarantees") by the Guarantors (as defined).
The Private Notes were issued, and the Excange Notes will be issued,
pursuant to an Indenture (the "Indenture") dated as of June 12, 1998, by and
among the Company, certain subsidiaries of the Company party thereto (the
"Guarantors") and American Stock Transfer & Trust Company, as Trustee (the
"Trustee").
In connection with our opinion, we have examined: (a) the Registration
Statement, including the Prospectus; (b) the Indenture; (c) the form of the
Exchange Notes; (d) the form of the Guarantees; and (e) such other proceedings,
documents and records as we have deemed necessary to enable us to render this
opinion.
In our examinations of the above referenced documents, we have assumed
the genuineness of all signatures, the authenticity of all documents,
certificates and instruments submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies.
Based upon the foregoing, assuming that the Indenture has been duly
authorized, executed and delivered by, and represents the valid and binding
obligation of, the Trustee, and when the Registration Statement, including any
amendments thereto, shall have become effective under the Securities Act and the
Indenture shall have been duly qualified under the Trust Indenture Act of 1939,
as amended, and having regard for such legal considerations as we deem relevant,
we are of the opinion that:
1. The Exchange Notes, when duly executed and delivered by or on behalf
of the Company in the form contemplated by the Indenture upon the terms set
forth in the Exchange Offer and authenticated by the Trustee or an
authenticating agent appointed by the Trustee in accordance with the terms of
the Indenture, will be legally issued and valid and binding obligations of the
Company enforceable in accordance with their terms; and
<PAGE>
2. The Guarantees, when duly executed and delivered by or on behalf of
the Guarantors in the form contemplated by the Indenture upon the terms set
forth in the Exchange Offer, will be legally issued and valid and binding
obligations of the Guarantors enforceable in accordance with their terms;
except, in each case, as enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other comparable
laws affecting the enforcement of creditors' rights generally or the application
of equitable principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law) and subject, in each case, to the
qualification that certain provisions thereof may be unenforceable in whole or
in part under the laws of the States of Florida and New York, as applicable, but
the inclusion of such provision does not affect the validity of the Exchange
Notes or the Guarantees and each of them contain legally adequate provisions for
the realization of the principal legal rights and benefits afforded thereby.
We are qualified to practice law in the State of Florida and we do not
purport to be experts on the law of any other jurisdiction other than the
federal laws of the United States of America. In rendering our opinions with
respect to the Exchange Notes and the Guarantees, we have assumed with your
permission, and without independent investigation, that the applicable laws of
the State of New York are identical in all relevant respects to the substantive
laws of the State of Florida. We express no opinion and make no representation
with respect to the law of any other jurisdiction.
This opinion is for your benefit and it may not be reprinted, reproduced
or distributed to any other person for any purpose without our prior written
consent, except that we hereby consent to the reference to our firm under the
caption "Legal Matters" in the Prospectus which is filed as part of the
Registration Statement, and to the filing of this opinion as an exhibit to such
Registration Statement. In giving this consent, we do not admit that we are
experts within the meaning of Section 11 of the Securities Act or within the
category of persons whose consent is required by Section 7 of the Securities
Act. Our opinion is expressly limited to the matters set forth above and we
render no opinion, whether by implication or otherwise, as to any other matters
relating to the Company, the Subsidiary Guarantors or any other person, or any
other document or agreement involved with the transactions contemplated by the
Exchange Offer. We assume no obligation to advise you of facts, circumstances,
events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinions expressed herein.
Sincerely,
GREENBERG TRAURIG HOFFMAN
LIPOFF ROSEN & QUENTEL, P.A.
EXHIBIT 10.6
CREDIT AGREEMENT
DATED AS OF MAY 28, 1998
AMONG
ENGLE HOMES, INC.,
a Florida corporation,
as Borrower,
AND
THE BANKS NAMED HEREIN,
as Banks,
AND
SUNTRUST BANK, SOUTH FLORIDA, NATIONAL ASSOCIATION,
a national banking association,
as Administrative Agent,
AND
NATIONSBANK, N.A.,
a national banking association,
as Documentation Agent
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
ARTICLE I DEFINITIONS............................................................................1
ARTICLE II THE CREDITS...........................................................................24
2.1 Commitment............................................................................24
2.2 Required Payments.....................................................................24
2.3 Ratable Loans.........................................................................25
2.4 Types of Advances.....................................................................26
2.5 Fees; Reduction in Commitment.........................................................26
2.6 Minimum Amount of Each Advance........................................................28
2.7 Optional Principal Payments...........................................................28
2.8 Method of Selecting Types and Interest Periods for
New Advances.................................................................29
2.9 Conversion and Continuation of Outstanding Advances...................................29
2.10 Changes in Interest Rate, etc.........................................................29
2.11 Determination of Applicable Margins and Applicable
Unused Commitment Rate.......................................................30
2.12 Types of Advances and Rates Applicable During Default.................................30
2.13 Method of Payment.....................................................................31
2.14 Notes; Telephonic Notices............................................................ 31
2.15 Interest Payment Dates; Interest Basis................................................32
2.16 Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions....................................................32
2.17 Lending Installations.................................................................32
2.18 Non-Receipt of Funds by Agent.........................................................32
2.19 Swing Line............................................................................32
2.20 Withholding Tax Exemption.............................................................34
2.21 Extension of Facility Maturity Date...................................................35
2.22 Conversion Period.....................................................................36
2.23 Replacement of Certain Banks..........................................................38
ARTICLE III CHANGE IN CIRCUMSTANCES...............................................................39
3.1 Yield Protection......................................................................39
3.2 Changes in Capital Adequacy Regulations...............................................40
3.3 Availability of Types of Advances.....................................................40
3.4 Funding Indemnification...............................................................41
3.5 Bank Statements; Survival of Indemnity................................................41
ARTICLE IV THE LETTER OF CREDIT FACILITY.........................................................41
i
<PAGE>
4.1 Facility Letters of Credit............................................................41
4.2 Limitations...........................................................................41
4.3 Conditions............................................................................42
4.4 Procedure for Issuance of Facility Letters of Credit..................................43
4.5 Duties of Issuing Bank................................................................44
4.6 Participation.........................................................................45
4.7 Compensation for Facility Letters of Credit...........................................46
4.8 Issuing Bank Reporting Requirements...................................................47
4.9 Indemnification; Nature of Issuing Bank's Duties......................................47
4.10 No Obligation to Issue................................................................49
4.11 Obligations of Issuing Bank and Other Banks...........................................49
ARTICLE V CONDITIONS PRECEDENT..................................................................49
5.1 Initial Advance.......................................................................49
5.2 Each Advance..........................................................................50
ARTICLE VI REPRESENTATIONS AND WARRANTIES........................................................51
6.1 Existence and Standing................................................................51
6.2 Authorization and Validity............................................................51
6.3 No Conflict; Government Consent.......................................................52
6.4 Financial Statements and Condition....................................................52
6.5 Material Adverse Change...............................................................52
6.6 Taxes.................................................................................52
6.7 Litigation and Contingent Obligations.................................................53
6.8 Subsidiaries..........................................................................53
6.9 ERISA.................................................................................53
6.10 Accuracy of Information...............................................................53
6.11 Regulations G, U and X................................................................53
6.12 Material Agreements...................................................................53
6.13 Labor Disputes and Acts of God........................................................54
6.14 Ownership.............................................................................54
6.15 Operation of Business.................................................................54
6.16 Laws; Environment.....................................................................54
6.17 Investment Company Act................................................................55
6.18 Public Utility Holding Company Act and
and Similar Acts.............................................................55
6.19 Indenture Provisions..................................................................55
6.20 Year 2000 Compliance..................................................................55
ARTICLE VII AFFIRMATIVE COVENANTS..........................................................................55
ii
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7.1 Financial and Other Reporting.........................................................56
7.2 Use of Proceeds.......................................................................58
7.3 Notice of Certain Events..............................................................58
7.4 Conduct of Business...................................................................59
7.5 Taxes.................................................................................59
7.6 Insurance.............................................................................59
7.7 Compliance with Laws..................................................................59
7.8 Maintenance of Properties.............................................................59
7.9 Inspection............................................................................59
7.10 Environment...........................................................................60
7.11 Wholly Owned Status...................................................................60
7.12 Ranking of Obligations................................................................60
7.13 Retirement of Old Senior Notes........................................................60
7.14 Year 2000 Compliance..................................................................60
ARTICLE VIII NEGATIVE COVENANTS.............................................................................61
8.1 Dividends.............................................................................61
8.2 Indebtedness..........................................................................61
8.3 Merger................................................................................62
8.4 Sale of Assets........................................................................63
8.5 Investments and Acquisitions..........................................................63
8.6 Liens.................................................................................64
8.7 Redemption............................................................................65
8.8 Affiliates............................................................................66
8.9 Subordinated Indebtedness.............................................................66
8.10 Amendments............................................................................66
8.11 Negative Pledge Agreements Prohibited; and
other Prohibited Agreements..................................................66
8.12 Intercompany Debt.....................................................................66
8.13 Ancillary Business Limitations........................................................66
8.14 Fiscal Year Calculation...............................................................67
8.15 Material Adverse Effect...............................................................67
ARTICLE IX FINANCIAL COVENANTS...................................................................67
9.1 Minimum Consolidated Tangible Net Worth Test..........................................67
9.2 Leverage Test.........................................................................67
9.3 Interest Coverage Test................................................................67
9.4 Fixed Charge Coverage Test............................................................67
9.5 Dividend Payout Test..................................................................67
9.6 Land Holding Test.....................................................................67
ARTICLE X EVENTS OF DEFAULT.....................................................................68
iii
<PAGE>
10.1 Representations and Warranties........................................................68
10.2 Non-payment...........................................................................68
10.3 Other Defaults........................................................................68
10.4 Other Indebtedness....................................................................68
10.5 Bankruptcy............................................................................69
10.6 Receiver..............................................................................69
10.7 Judgment..............................................................................70
10.8 Unfunded Liabilities..................................................................70
10.9 Withdrawal Liability..................................................................70
10.10 Increased Contributions...............................................................70
10.11 Change in Control.....................................................................70
10.12 Dissolution...........................................................................71
10.13 Guaranty..............................................................................71
10.14 Collateral............................................................................71
10.15 Financial Covenants...................................................................71
10.16 Senior Debt Rating....................................................................71
ARTICLE XI ACCELERATION, WAIVERS, AMENDMENTS
AND REMEDIES.................................................................72
11.1 Acceleration; Remedies................................................................72
11.2 Amendments............................................................................72
11.3 Preservation of Rights................................................................73
11.4 New Guarantor.........................................................................74
ARTICLE XII GENERAL PROVISIONS....................................................................74
12.1 Survival of Representations...........................................................74
12.2 Governmental Regulation...............................................................74
12.3 Taxes.................................................................................74
12.4 Headings..............................................................................75
12.5 Entire Agreement......................................................................75
12.6 Nature of Obligations; Benefits of this Agreement.....................................75
12.7 Expenses; Indemnification.............................................................75
12.8 Numbers of Documents..................................................................75
12.9 Accounting............................................................................75
12.10 Severability of Provisions............................................................76
12.11 Nonliability of Banks and Issuing Bank................................................76
12.12 CHOICE OF LAW.........................................................................76
12.13 Arbitration...........................................................................76
12.14 CONSENT TO JURISDICTION...............................................................77
12.15 WAIVER OF JURY TRIAL..................................................................78
12.16 Confidentiality.......................................................................78
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12.17 Limit on Interest.....................................................................78
ARTICLE XIII AGENT.................................................................................79
13.1 Appointment...........................................................................79
13.2 Powers................................................................................79
13.3 General Immunity......................................................................79
13.4 No Responsibility for Loans, Recitals, etc............................................79
13.5 Action on Instructions of Banks.......................................................79
13.6 Employment of Agents and Counsel......................................................80
13.7 Reliance on Documents; Counsel........................................................80
13.8 Agent's Reimbursement and Indemnification.............................................80
13.9 Rights as a Bank or Issuing Bank......................................................80
13.10 Bank Credit Decision..................................................................81
13.11 Successor Agent.......................................................................81
13.12 Agent's Fee...........................................................................81
ARTICLE XIV SETOFF; RATABLE PAYMENTS..............................................................82
14.1 Setoff................................................................................82
14.2 Ratable Payments......................................................................82
ARTICLE XV BENEFIT OF AGREEMENT, ASSIGNMENTS;
PARTICIPATIONS...............................................................82
15.1 Successors and Assigns................................................................82
15.2 Participations........................................................................83
15.2.1 Permitted Participants; Effect.......................................83
15.2.2 Voting Rights........................................................83
15.2.3 Benefit of Setoff....................................................83
15.3 Assignments...........................................................................83
15.3.1 Permitted Assignments................................................83
15.3.2 Effect; Effective Date...............................................84
15.4 Dissemination of Information..........................................................85
15.5 Tax Treatment.........................................................................85
ARTICLE XVI NOTICES...............................................................................85
16.1 Giving Notice.........................................................................85
16.2 Change of Address.....................................................................85
ARTICLE XVII COUNTERPARTS...................................................................................86
</TABLE>
v
<PAGE>
LIST OF SCHEDULES AND EXHIBITS
EXHIBITS:
EXHIBIT "A" Form of Environmental Agreement
EXHIBIT "B" Form of Guaranty
EXHIBIT "C" Form of Mortgage
EXHIBIT "D" Form of Note
EXHIBIT "E" Form of Borrowing Notice
EXHIBIT "F" Form of Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen
& Quentel, P.A.
EXHIBIT "G" Form of Opinion of General Counsel
EXHIBIT "H" Compliance Certificate of Authorized Officer (Financial
Covenant Tests)
EXHIBIT "I" Assignment (with Form of Notice of Assignment attached as
EXHIBIT "1")
SCHEDULES:
SCHEDULE "A" List of Banks and their Commitments
SCHEDULE "1" Refinanced Loans
SCHEDULE "4.4" Existing Letters of Credit
SCHEDULE "6.3" Required Orders, Consents and Approvals
SCHEDULE "6.4" Existing Indebtedness
SCHEDULE "6.7" Existing Litigation and Proceedings
SCHEDULE "6.8" Subsidiaries
SCHEDULE "8.2(II)" Permitted Indebtedness
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<PAGE>
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of May 28, 1998, among ENGLE HOMES,
INC., a Florida corporation, and SUNTRUST BANK, SOUTH FLORIDA, NATIONAL
ASSOCIATION, a national banking association, as Agent for the Banks, and the
following Banks (also listed on the signature pages of this Agreement): SUNTRUST
BANK, SOUTH FLORIDA, NATIONAL ASSOCIATION, NATIONSBANK, N.A., BANKBOSTON, N.A.,
BANK ONE, ARIZONA, N.A., NORWEST BANK COLORADO, NATIONAL ASSOCIATION, GUARANTY
FEDERAL BANK, FSB, CREDIT LYONNAIS ATLANTA AGENCY AND BANQUE PARIBAS. The
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Actual Cost" means the total actual direct costs incurred by a
Guarantor (excluding interest expense, overhead, closing, carrying and other
indirect costs), calculated in accordance with GAAP.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
Borrower or any Guarantor (i) acquires any going concern or all or substantially
all of the assets of any firm, corporation or division thereof, whether through
purchase of assets, merger or otherwise or (ii) directly or indirectly acquires
(in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
partnership or other ownership interests of a partnership, joint venture,
limited liability company or other similar business organization.
"Administrative Agent" means the Agent.
"Advance" means a borrowing hereunder consisting of the aggregate
amount of the several Loans made by Banks (or Swing Line Advances made by
SunTrust) to Borrower of the same Type and, in the case of a LIBOR Advance, for
the same Interest Period.
"Affected Bank" is defined in Section 2.23.
"Affiliate of any Person" means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person beneficially
owns (within the meaning of Rule 13d-3 of
<PAGE>
the Securities Exchange Act of 1934, as amended) 10% or more of any class of
voting securities (or other ownership interests) of the controlled Person or
possesses, directly or indirectly, the power to direct or cause the direction of
the management or policies of the controlled Person, whether through ownership
of stock, by contract or otherwise.
"Affiliate" means any Person which directly or indirectly controls, or
is controlled by, or is under common control with, Borrower. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Agent" means SunTrust Bank, South Florida, National Association, a
national banking association, in its capacity as agent for Banks pursuant to
Article XIII, and not in its individual capacity as a Bank, and any successor
Agent appointed pursuant to Article XIII. The Documentation Agent is not the
Agent.
"Aggregate Available Credit" means the aggregate of the Available
Credits of all of Banks.
"Aggregate Commitment" means the aggregate of the Commitments of all
Banks, as reduced from time to time pursuant to the terms hereof. As of the date
of this Agreement, the Aggregate Commitment is $170,000,000.00.
"Aggregate Senior Indebtedness" means the aggregate principal balance
outstanding with respect to (i) the Senior Notes, (ii) the Old Senior Notes,
(iii) any Refinancing Indebtedness of the Senior Notes and the Old Senior Notes,
and (iv) any other Public Indebtedness.
"Agreement" means this Credit Agreement, as it may be amended or
modified and in effect from time to time.
"Applicable LIBOR Rate Margin" means, as at any date of determination,
the margin indicated in Section 2.11 as then applicable in the determination of
LIBOR Rates.
"Applicable Unused Commitment Rate" means, as at any date of
determination, the rate per annum indicated in Section 2.11 as then applicable
in the determination of the Unused Commitment Fee under Section 2.5(b).
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Authorized Officer" means any one or more of the chairman, president,
chief executive officer, executive vice president, chief financial officer,
treasurer, or any vice president or other officer of Borrower or each Guarantor,
as applicable, acting singly or together, in accordance with the applicable
resolutions and bylaws of Borrower or such Guarantor.
2
<PAGE>
"Available Credit" means, at any date with respect to any Bank, the
amount (if any) by which such Bank's Commitment exceeds the sum of (i) the
outstanding principal balance of such Bank's Loans as of such date, plus (ii)
such Bank's ratable share (determined in accordance with Section 4.6) of the
Facility Letter of Credit Obligations as of such date.
"Banks" means the lending institutions listed on SCHEDULE "A" attached
hereto and on the signature pages of this Agreement and their respective
successors and assigns.
"Borrower" means ENGLE HOMES, INC., a Florida corporation, and its
successors and assigns.
"Borrowing Base" means the sum of the following assets of the Borrower
and Guarantors, without duplication:
(i) ninety percent (90%) of all Housing Unit Costs, plus
(ii) eighty percent (80%) of all Lot Costs of Presold Lots,
plus
(iii) seventy percent (70%) of all Lot Costs of Spec Lots,
plus
(iv) fifty percent (50%) of all Land Under Development Costs,
plus
(v) twenty-five percent (25%) of all Actual Costs to acquire
Land Not Under Development, plus
(vi) twenty-five percent (25%) of all Investments in Joint
Ventures, plus
(vii) fifty percent (50%) of all Actual Costs to construct a
Sales Center at any master planned unit development;
provided, however, that:
(a) no asset shall be included in the Borrowing Base to the
extent it is subject to any Lien other than a Permitted Lien,
(b) no more than Twenty Two Million and 00/100 Dollars
($22,000,000.00) of Housing Unit Costs for Model Units shall be
included in the Borrowing Base,
(c) no more than Twenty Nine Million and 00/100 Dollars
($29,000,000.00) of Housing Unit Costs for Spec Units shall be included
in the Borrowing Base,
(d) the total number of Model Units included in the Borrowing
Base shall not
3
<PAGE>
at any time exceed ten percent (10%) of the total number of Units
actually sold and conveyed to purchasers during the last four (4)
fiscal quarter periods then ended, and to the extent any such excess
exists, then the product obtained by multiplying the excess number of
Model Units by the quotient obtained by dividing ninety percent (90%)
of all Housing Unit Costs for all Model Units by the total number of
all Model Units shall reduce and be applied as a deduction when making
the calculation in clause (i) above,
(e) the total number of Spec Units included in the Borrowing
Base shall not at any time exceed twenty percent (20%) of the total
number of Units actually sold and conveyed to purchasers during the
last four (4) fiscal quarter periods then ended, and to the extent any
such excess exists, then the product obtained by multiplying the excess
number of Spec Units by the quotient obtained by dividing ninety
percent (90%) of all Housing Unit Costs for all Spec Units by the total
number of all Spec Units shall reduce and be applied as a deduction
when making the calculation in clause (i) above,
(f) the total amount of all Lot Costs of Spec Lots, Land Under
Development Costs, Actual Costs to acquire Land Not Under Development,
and Investments in Joint Ventures shall not exceed sixty-five percent
(65%) of the total amount of all Housing Unit Costs, Lot Costs of
Presold Lots, Lot Costs of Spec Lots, Land Under Development Costs,
Actual Costs to acquire Land Not Under Development, Investments in
Joint Ventures, and Actual Costs to construct a Sales Center at any
master planned unit developments and to the extent any such excess
exists, then the excess shall directly reduce and be applied first as a
deduction against Lot Costs of Spec Lots when making the calculation in
clause (iii) above and then any balance of the excess shall reduce and
be applied as a deduction against Land Under Development Costs when
making the calculation clause (iv) above, and lastly any remaining
excess shall reduce and be applied as a deduction against Actual Costs
to acquire Land Not Under Development when making the calculation in
clause (v) above,
(g) no more than Fifteen Million and 00/100 Dollars
($15,000,000.00) of the amount in clause (v) above shall be included in
the Borrowing Base,
(h) no more than Three Million Seven Hundred Fifty Thousand
and 00/100 Dollars ($3,750,000.00) of the amount in clause (vi) above
shall be included in the Borrowing Base,
(i) no more than One Million and 00/100 Dollars
($1,000,000.00) of the amount in clause (vii) above shall be included
in the Borrowing Base, and
(j) the total Borrowing Base shall be reduced by the total
amount of earnest money deposits and down payments on Presold Lots and
Presold Housing Units, and any other deposits and down payments, that
are paid by a buyer but not held in escrow until closing.
4
<PAGE>
"Borrowing Base Certificate" means a written certificate in a form and
detail acceptable to Agent setting forth the amount of the Borrowing Base with
respect to the calendar month most recently completed, certified as true and
correct by the chief financial officer or treasurer of Borrower.
"Borrowing Date" means a date on which an Advance is made hereunder.
"Borrowing Notice" is defined in Section 2.8.
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of LIBOR Advances, a day (other than a Saturday or Sunday) on which
banks generally are open in West Palm Beach, Florida and New York for the
conduct of substantially all of their commercial lending activities and on which
dealings in United States dollars are carried on in the London interbank market,
and (ii) for all other purposes, a day (other than a Saturday or Sunday) on
which banks generally are open in West Palm Beach, Florida for the conduct of
substantially all of their commercial lending activities.
"Capitalized Lease" of a Person means any lease of Property by such
Person as lessee which would be capitalized on a balance sheet of such Person
prepared in accordance with GAAP.
"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with GAAP.
"Cash Equivalents" means:
(i) direct obligations of the United States or any agency
thereof or obligations guaranteed by the United States or any agency
thereof, in each case maturing within one (1) year after the date of
acquisition thereof;
(ii) certificates of deposit or bankers' acceptances maturing
within one (1) year after the date of acquisition thereof issued by a
bank, trust company or savings and loan association which is organized
under the laws of the United States or any state thereof having
capital, surplus and undivided profits aggregating in excess of $250
million and a Keefe Bank Watch Rating of A or better;
(iii) commercial paper rated A1 or better by Standard & Poor's
Corporation or P1 by Moody's Investors Service, Inc., and given the
highest rating by any other established national credit rating agency,
and maturing not more than one (1) year after the date of the
acquisition thereof; and
5
<PAGE>
(iv) repurchase agreements or money market accounts which are
fully secured by direct obligations of the United States or any agency
thereof.
"Change in Control" means (a) as to Borrower, the acquisition by any
Person, or two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of 50% or more of the outstanding
shares of voting stock of Borrower, or (b) as to any Guarantor, the acquisition
by any Person (except Borrower or one or more of the Guarantors), or two or more
Persons acting in concert of any beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of any of the outstanding shares of voting stock of such
Guarantor.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Collateral" means all (i) Presold Units, Spec Units, Model Units,
Finished Lots, and Land Under Development, Land Not Under Development,
Investments in Joint Ventures, and Sales Centers owned by Borrower or any
Guarantor from time to time, and (ii) all fixtures, tangible and intangible
personal property and tenements, hereditaments and appurtenances described in
the Collateral Documents; provided, however, if the encumbering of all of the
Collateral by the Collateral Documents would result in an exceedance of the
forty percent (40%) limitation in clause (i) of the definition of "Permitted
Liens" in the Indenture, then, for so long as the Senior Debt is outstanding
there shall be excluded from the Collateral a portion thereof selected by Agent
sufficient to avoid a violation of the forty percent (40%) limitation.
"Collateral Documents" means the Mortgage, and any UCC-1 Financing
Statements and other documents and instruments (satisfactory in form and
substance to Agent) as the Agent shall require to grant Banks a properly
perfected first and prior lien on and security interest in the Collateral as
security for the Obligations and obligations under the Guaranty.
"Commitment" means, for each Bank, the obligation of such Bank to make
Loans, and to participate in the Facility Letters of Credit in accordance with
Section 4.6(a), not exceeding the amount set forth opposite its signature below
and on SCHEDULE "A" hereto or as set forth in any Notice of Assignment relating
to any assignment that has become effective pursuant to Section 15.3.2, as such
amount may be modified from time to time pursuant to the terms hereof.
"Consolidated Indebtedness" means, at any date, the outstanding amount
of all Indebtedness of Borrower and its Subsidiaries, without duplication, all
determined on a consolidated basis for Borrower and its Subsidiaries in
conformity with GAAP.
"Consolidated Interest Expense" means for any most recent rolling four
fiscal quarter period, without duplication, the aggregate amount of interest
which, in conformity with GAAP, would be set opposite the caption "interest
expense" or any like caption on a consolidated income statement for Borrower and
its Subsidiaries (other than for Borrower's mortgage lending and title
6
<PAGE>
insurance Subsidiaries), including, without limitation, imputed interest
included on 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 associated with Rate Hedging Obligations, amortization
of other financing fees and expenses, the interest portion of any deferred
payment obligation, amortization of discount or premiums, if any, and all other
noncash interest expense other than interest and other charges amortized to cost
of sales. Consolidated Interest Expense includes, with respect to Borrower and
Guarantors (other than for Borrower's mortgage lending and title insurance
Subsidiaries), without duplication, all interest included as a component of cost
of sales for such period.
"Consolidated Interest Incurred" means for any most recent rolling
four fiscal quarter period, without duplication, the aggregate amount of
interest which, in conformity with GAAP, would be set opposite the caption
"interest expense" or any like caption on a consolidated income statement for
Borrower and its Subsidiaries (other than for Borrower's mortgage lending and
title insurance Subsidiaries), including, without limitation, imputed interest
included on 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 associated with Rate Hedging Obligations, amortization
of other financing fees and expenses, the interest portion of any deferred
payment obligation, amortization of discount or premiums, if any, and all other
noncash interest expense other than interest and other charges amortized to cost
of sales. Consolidated Interest Incurred includes, without duplication, all
capitalized interest for such period, all interest attributable to discontinued
operations for such period to the extent not set forth on the income statement
under the caption "interest expense" or any like caption, and all interest
actually paid by Borrower or its Subsidiaries (other than for Borrower's
mortgage lending and title insurance Subsidiaries) under any contingent
obligation during such period.
"Consolidated Liabilities" means, at any date, all amounts which are
required to be classified as "liabilities" by GAAP on the consolidated balance
sheet for Borrower and its Subsidiaries, less only those "liabilities" relating
to the Borrower's financial services Subsidiaries to the extent offset by assets
of those Subsidiaries. When calculating Consolidated Liabilities, "unrestricted
cash and unrestricted cash equivalents" shall be netted against "accounts
payable."
"Consolidated Net Income" means, for any period, the net income (or
loss) of Borrower and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period, determined in conformity with GAAP.
"Consolidated Tangible Net Worth" means, at any date, the sum of all
capital accounts (including without limitation, any paid-in capital, capital
surplus, and retained earnings) determined on a consolidated basis for Borrower
and its Subsidiaries in conformity with GAAP, less its consolidated Intangible
Assets. For purposes of this definition "Intangible Assets" means the amount (to
the extent reflected in determining such consolidated stockholders' equity) of
(I) all write-ups in the book value of any asset owned by Borrower or any
Subsidiary, (II) any amount, however designated on the balance sheet,
representing the excess of the purchase price
7
<PAGE>
paid for assets or stock acquired over the value assigned thereto on the books
of Borrower or any Subsidiary, (III) all unamortized debt and debt issuance
expense, deferred charges, goodwill, patents, trademarks, service marks, trade
names, copyrights, organization or developmental expenses and other intangible
items, and (IV) all items that would be considered intangible assets under GAAP.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrower, Guarantors or any Subsidiary, are
treated as a single employer under Section 414 of the Code.
"Conversion/Continuation Notice" is defined in Section 2.9.
"Conversion Date" means the first day of the Conversion Period,
determined pursuant to Section 2.22.
"Conversion Period" means the period of time (i) commencing on the
Conversion Date and expiring when all Obligations have been satisfied in full,
and (ii) during which, among other things, Borrower shall provide, and cause
Guarantors to provide, Banks Collateral for the Obligations, in accordance with
Section 2.22.
"Default Rate" means the applicable rate specified in Section 2.12.
"Dividend" means (i) any dividend paid or declared by Borrower or any
Subsidiary, as applicable; (ii) any purchase, redemption, retirement or other
acquisition by Borrower or any Subsidiary, as applicable for value, or the
setting aside of any funds or issuance of any warrants for such purpose, of any
of the capital stock of Borrower or such Subsidiary, as applicable now or
hereafter outstanding or any interest therein; and (iii) as to any Subsidiary,
any distribution of assets, properties, cash, rights, obligations or other
consideration or securities of such Subsidiary, directly or indirectly, to
Borrower, excluding repayment of Indebtedness to Borrower permitted by clause
(v) of Section 8.2.
"Documentation Agent" means Nationsbank, N.A., a national banking
association. The Documentation Agent is not the Agent, carries the title of
Documentation Agent in name only, and is not an agent of any Bank pursuant to
this Agreement.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Due Diligence Documents" means all of the following, as required
pursuant to Section 2.22, certified to the Banks and in form and substance
satisfactory to Agent:
(i) mortgagee's forms of title insurance policies, issued by
Commonwealth Land Title Insurance Company or any other nationally
recognized title insurance
8
<PAGE>
company satisfactory to Agent, in an amount not less than the amount of
the Obligations that Agent determines is allocable to the property
insured, with premiums fully paid, insuring that the Mortgages grant
valid and perfected first priority mortgage or similar liens on and
security interests in, the Collateral, in each case free and clear of
all defects and encumbrances other than those that are acceptable to
the Agent, and containing, to the extent such coverage is available in
the state in which the Collateral is located, (a) full coverage, by
affirmative insurance, against liens of mechanics', materialmen,
laborers, and any other person who might claim statutory or other
common law lien rights relating to services performed, (b) no survey
exceptions, (c) such other endorsements as the Agent may deem necessary
to insure that any off site easements benefiting the Collateral are
valid and enforceable, (d) a "tie-in" endorsement aggregating the
insurance amount of the policies, and (e) such other endorsements and
coverages as may be required by Agent and permitted in the state where
the Collateral is located.
(ii) evidence satisfactory to Agent that the insurance
coverages required by the Mortgages and other Loan Documents are in
full force and effect.
(iii) evidence satisfactory to Agent that all taxes due with
respect to the Collateral Documents, other recording and filing fees,
all title insurance fees and premiums, survey costs, fees of Bank
counsel and all other costs, charges, expenses and fees in connection
with the Collateral, Collateral Documents and/or the perfection of the
liens and security interests granted thereby have been paid in full.
(iv) (a) a certificate of the appropriate state official from
the State of Florida, certifying that the Borrower and each Guarantor
is a corporation in existence, and active and in good standing, under
the laws of such state; (b) a certificate of the appropriate official
of each state where the Collateral is located, certifying that each
Guarantor that owns Collateral in that state is duly authorized to
transact business in that state; (c) the articles of incorporation with
all amendments thereto for the Borrower and each of the Guarantors,
certified by the appropriate official of the state of Florida as being
true and complete; (d) a certificate of the secretary of the Borrower
and each of the Guarantors showing the resolutions adopted by their
respective boards of directors authorizing the execution and delivery
of the Collateral Documents for their respective purposes, showing the
names, offices and specimen signatures of each of the officers signing
the Collateral Documents and certifying that the by-laws that are
attached to the certificate are true and complete.
(v) an original print of each actual survey, or a true and
correct copy of each recorded plat along with the original supporting
certification, relied upon by the title insurer to issue the title
insurance policies described in clause (i) above free and clear of
survey exceptions.
(vi) a certificate from a qualified engineer satisfactory to
Agent certifying what
9
<PAGE>
portions of the Collateral are located within any flood plain area.
(vii) a UCC-11 or comparable search of a professional records
search firm satisfactory to Agent stating that no chattel mortgage,
financing statement or other document or instrument granting or
perfecting any lien or security interest in any Collateral exists.
(viii) if required by Agent, copies of any certificates of
occupancy, building permits, development orders and other licenses,
consents, approvals or permits required by applicable laws or
governmental authorities or requirements to own, construct, develop,
use, operate, sell or occupy the Collateral or encumber the Collateral
as security for the Obligations.
(ix) if required by Agent, current reports prepared by an
environmental engineering firm satisfactory to Agent certifying whether
there are any hazardous or toxic materials, wastes, or other substances
or other environmental, safety, or health concerns with respect to any
of the Collateral.
(x) if required by Agent or any law, statute, rule, regulation
or requirement of any regulatory or governmental agency or authority,
an appraisal report satisfactory to Agent showing the appraised fair
market value of the Collateral.
(xi) if required by Agent, evidence from local utilities
companies or governmental authorities confirming whether electricity,
potable water, sanitary sewer and other utilities are available to the
Collateral at its boundaries in capacities adequate to use the
Collateral for Housing Unit purposes.
(xii) opinions of counsel satisfactory to Agent of Borrower
and Guarantors licensed to practice law in Florida and each state where
any Collateral is located with respect to all of the Collateral
Documents and the Environmental Agreement substantially similar to the
opinions in Exhibit "F" and EXHIBIT "G" hereto and addressing such
other matters as Agent may require.
(xiii) such other documents, instruments, materials, data and
information as Agent may reasonably require.
"EBITDA" means, for any most recent rolling four fiscal quarter period,
without duplication, the following, all as determined on a consolidated basis
for Borrower and its Subsidiaries in conformity with GAAP,
(i) the sum of the amounts for such period of (a) Consolidated
Net Income, (b) Consolidated Interest Expense, (c) charges against
income for all federal, state and local taxes, (d) depreciation
expense, (e) amortization expense, (f) other non-cash charges and
expenses (but specifically excluding losses arising from the sale of a
Subsidiary
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which were due in whole or in part to amortization of good will), and
(g) any losses arising outside of the ordinary course of business which
have been included in the determination of Consolidated Net Income,
less
(ii) any gains arising outside of the ordinary course of
business which have been included in the determination of Consolidated
Net Income.
"EBITDAR" means, for any most recent rolling four fiscal quarter
period, EBITDA plus rental and operating lease expenses, determined, without
duplication, on a consolidated basis for Borrower and its Subsidiaries in
conformity with GAAP.
"Environmental Agreement" means each and all Environmental Indemnity
Agreements executed by Borrower and Guarantors from time to time for the benefit
of Banks and Agent, and relating to the Collateral, as the same may be amended
or modified and in effect from time to time, each being substantially in the
form of EXHIBIT "A".
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.
"Event of Default" means an event described in Article X after the
expiration of any applicable cure or notice period provided in Article X.
"Excluded Taxes" is defined in Section 3.1(i).
"Existing Letters of Credit" is defined in Section 4.4(e).
"Extension Request" is defined in Section 2.21(a).
"Facility Letter of Credit" means a Letter of Credit issued by the
Issuing Bank for the account of Borrower in accordance with Article IV.
"Facility Letter of Credit Fee" means a fee, payable with respect to
each Facility Letter of Credit issued by the Issuing Bank, in an amount per
annum equal to the product of (i) one percent (1%), and (ii) the face amount of
such Facility Letter of Credit.
"Facility Letter of Credit Obligations" means, at any date, the sum of
(i) the aggregate undrawn face amount of all outstanding Facility Letters of
Credit, plus (ii) the aggregate amount paid by an Issuing Bank on any Facility
Letters of Credit to the extent (if any) not reimbursed by Banks under Section
4.6 or by the Borrower.
"Facility Maturity Date" means May 29, 2001, as the same may be
extended for one (1) year as provided in Section 2.21.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to
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the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average of the quotations at approximately 10:00 a.m., West Palm Beach, Florida
time, on such day on such transactions received by Agent from three (3) Federal
funds brokers of recognized standing selected by Agent in its sole discretion.
"Financial Covenant Test" means each or any (as the context requires)
of the Consolidated Tangible Net Worth Test, the Leverage Test, the Interest
Coverage Test, the Fixed Charge Coverage Test, Dividend Payout Test, and Land
Holding Test, each as defined in Article IX and measured on a current quarterly
basis from time to time by the Agent, based on the financial statements and
information delivered to Agent pursuant to Section 7.1 or Section 7.3.
"Finished Lot" means a parcel of land owned by Borrower or any
Guarantor which (i) is duly platted and zoned and fully or substantially
developed with roads, drainage and other infrastructure necessary for use as a
site for a Housing Unit, (ii) has or where there would be upon application all
requisite building permits and other governmental and private consents and
approvals necessary to allow immediate construction of a Housing Unit, and (iii)
has available for connection at its boundaries potable water, sanitary sewer,
electricity and all other necessary utilities in capacities sufficient for the
Housing Unit. The term "Finished Lot" shall also include any real property upon
which the construction of a Housing Unit has commenced or has been completed,
but shall specifically not include the Housing Unit (or any portion thereof).
"Fixed Charges" means for any most recent rolling four fiscal quarter
period, without duplication, the sum of the following, as determined on a
consolidated basis for Borrower and its Subsidiaries in conformity with GAAP,
(i) Consolidated Interest Incurred,
(ii) current maturities of long-term Indebtedness, and
(iii) rental and operating lease expenses.
"Floating Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day, changing when and as the Prime Rate
changes, and (ii) the Federal Funds Effective Rate for such day, plus one half
of one percent (.5%), changing when and as the Federal Funds Effective Rate
changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
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"GAAP" means generally accepted accounting principles in effect from
time to time, consistently applied.
"Guarantors" means ENGLE HOMES/ORLANDO, INC., ENGLE HOMES/PALM BEACH,
INC., ENGLE HOMES/BROWARD, INC., ENGLE HOMES/PEMBROKE, INC., ENGLE HOMES/GULF
COAST, INC., ENGLE HOMES/ATLANTA, INC. (f/k/a Engle Homes/Dade, Inc.), ENGLE
HOMES/SOUTHWEST FLORIDA, INC. (f/k/a Engle Homes/Naples, Inc.), ENGLE HOMES/LAKE
BERNADETTE, INC., ENGLE HOMES/COLORADO, INC. (f/k/a Park Engle Homes, Inc.),
ENGLE HOMES/ARIZONA, INC. (f/k/a Engle Homes/Maryland, Inc.), ENGLE HOMES/NORTH
CAROLINA, INC., ENGLE HOMES/TEXAS, INC., ENGLE HOMES/VIRGINIA, INC., GREENLEAF
HOMES, INC., PREFERRED BUILDERS REALTY, INC., PREFERRED HOME MORTGAGE COMPANY,
UNIVERSAL LAND TITLE, INC., PEMBROKE FALLS REALTY, INC., ST. TROPEZ AT BOCA
GOLF, INC., BILTMORE SOUTH CORP., ENGLE HOMES/JACKSONVILLE, INC. and BANYAN
TRAILS, INC., each a Florida corporation, ENGLE HOMES/ARIZONA CONSTRUCTION INC.,
an Arizona corporation, UNIVERSAL LAND TITLE OF COLORADO, INC., a Colorado
corporation, and ENGLE HOMES REALTY, INC., a Georgia corporation, and their
successors and assigns. After the date of this Agreement, "Guarantor" shall also
include any Person that shall hereafter become a Subsidiary of Borrower or
required to become a Guarantor in accordance with Section 11.4 hereof, and their
successors and assigns. "Guarantor" means any one of the Guarantors.
"Guaranty" means a Guaranty, in substantially the form of EXHIBIT "B",
duly executed by Guarantors, as the same may be amended or modified from time to
time.
"Housing Unit" means a single-family dwelling, constructed or under
construction on a Finished Lot, whether detached or attached (including
condominiums but excluding mobile homes). Each "Housing Unit" is either a
Presold Unit, a Spec Unit or a Model Unit.
"Housing Unit Costs" means, with respect to each Housing Unit, the
total Actual Costs to construct the Housing Unit, including, without limitation,
labor and materials, construction and building permits, tap, connection and
impact fees, improvement district fees, and fees charged by governmental
authorities. "Housing Unit Costs" shall specifically exclude the acquisition
cost and any other costs, expenses and fees associated with the Finished Lot or
parcel on which the Housing Unit is located.
"Indebtedness" of a Person means, without duplication, and whether
contingent or absolute, and howsoever and whensoever created, arising, evidenced
or acquired, as measured at any time in accordance with GAAP on a consolidated
basis, such Person's
(i) obligations for borrowed money, including, without
limitation, obligations evidenced by bonds, debentures, notes, drafts
or similar instruments,
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(ii) obligations representing the deferred purchase price of
Property or services or for the cost of Property constructed or of
improvements (other than trade accounts payable and accrued expenses
arising or occurring in the ordinary course of such Person's business
which are not overdue by more than thirty (30) days or which are being
contested in good faith by appropriate proceedings),
(iii) obligations, whether or not assumed, secured by Liens
on, or payable out of the proceeds or production from, Property now or
hereafter owned or acquired by such Person,
(iv) conditional sales contracts and similar title retention
debt instruments,
(v) Capitalized Lease Obligations,
(vi) net liabilities under Rate Hedging Obligations, and
obligations under asset securitization vehicles,
(vii) obligations to redeem capital stock at a stated time or
at the option of the holder,
(viii) obligations to make any loan, advance, or capital
contribution,
(ix) reimbursement obligations with respect to a Letter of
Credit (whether drawn or undrawn),
(x) withdrawal liability under ERISA,
(xi) all liabilities and obligations of others of the kind
described in clauses (i) through (x) that such Person has guaranteed,
endorsed or that is otherwise its legal liability (other than
endorsements of negotiable instruments for collection in the ordinary
course of business).
Indebtedness includes, without limitation, (A) in the case of Borrower, the
Obligations and the obligations evidenced by the Senior Notes, the Old Senior
Notes and the documents executed in connection therewith, and (B) in the case of
Guarantors, the obligations under the Guaranty, and the obligations under the
guaranties executed pursuant to the Indenture.
"Indenture" means that certain Indenture, dated as of February 2, 1998,
between Borrower, guarantors party thereto, and American Stock Transfer & Trust
Company, as trustee, pursuant to which the Senior Notes were issued.
"Interest Period" means, for each LIBOR Advance, the period commencing
on the date of such LIBOR Advance and ending on the last day of the period
selected by Borrower pursuant to
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the provisions herein and, thereafter, each subsequent period commencing on the
last day of the immediately preceding Interest Period and ending on the last day
of the period selected by Borrower pursuant to the provisions of this Agreement.
The duration of each Interest Period shall be one (1), two (2), or three (3)
months as selected by Borrower (A), for a new Advance, in the Borrowing Notice,
or (B), for an outstanding Advance, in the Conversion/Continuation Notice;
provided, however, that:
(i) Whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided that if such extension would cause the last day
of such Interest Period to occur in the next following calendar month,
the last day of such Interest Period shall occur on the next preceding
Business Day; and
(ii) No Interest Period with respect to any LIBOR Advance
shall extend beyond the Facility Maturity Date.
"Inventory Valuation Date" means the last day of the most recent
calendar month with respect to which Borrower is required to have delivered a
Borrowing Base Certificate pursuant to Section 7.1(vi) hereof.
"Investment" of a Person means any loan, advance, extension of credit
(other than, as to Borrower and Guarantors, accounts receivable and extensions
of trade credit arising in the ordinary course of business in accordance with
normal trade practices of Borrower or such Guarantor, as the case may be), or
contribution of capital by such Person to any other Person or any investment in,
or purchase or other acquisition of, the stock, partnership, joint venture or
limited liability company interests, notes, debentures or other securities of
any other Person made by such Person.
"Investments in Joint Ventures" means any Investment of Borrower or any
of its Subsidiaries in a Person that (i) is not a Subsidiary, (ii) has at all
times no Indebtedness (other than trade accounts payable and other accrued
expenses in the ordinary course of business) or Liens on its Property (other
than Permitted Liens), and (iii) that is comprised of financially solvent
Persons with experience in the for sale home building business comparable to
Borrower or otherwise of sound reputation in the real estate industry, for the
purpose of acquiring land that is zoned for use as a site for single family
dwellings, or developing such land with single family dwellings.
"Issuance Date" means the date on which a Facility Letter of Credit is
issued, amended or extended.
"Issuing Bank" means SunTrust or such other Bank as Borrower, Agent and
such other Bank may agree upon, that may from time to time issue Facility
Letters of Credit.
"Land Not Under Development" means any parcel of land owned by Borrower
or any
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Guarantor that is zoned for use as a site for Housing Units but that is not (i)
a Finished Lot, or (ii) Land Under Development.
"Land Under Development" means any parcel of land owned by Borrower or
any Guarantor that is zoned for use as a site for Housing Units and that is
being or within the ensuing six (6) month period will be actively and physically
developed into Finished Lots, and that will be fully developed into Finished
Lots within one (1) year after commencement of physical development; provided,
however, that the term "Land Under Development" shall not include any Finished
Lot. If active and physical development of any Land Under Development into
Finished Lots is not commenced within said six (6) month period or is not fully
developed into Finished Lots within one (1) year after commencement of physical
development, it shall thereafter be treated for all purposes as Land Not Under
Development.
"Land Under Development Costs" means, with respect to any Land Under
Development, the Actual Costs to acquire and develop the land into Finished
Lots.
"Lending Installation" means, with respect to a Bank or Agent, any
office, branch, banking subsidiary of the holding company of a Bank or Agent, or
banking Affiliate of such Bank or Agent.
"Letter of Credit" means a letter of credit or similar instrument which
is issued by a financial institution upon the application of a Person or upon
which such Person is an account party or for which such Person is in any way
liable, including without limitation any Facility Letter of Credit.
"LIBOR Advance" means an Advance which bears interest at a LIBOR Rate.
"LIBOR Base Rate" means, with respect to a LIBOR Advance for the
relevant Interest Period, the rate of interest determined by Agent, based on
Telerate System reports or other source as may be selected by Agent, to be the
"London Interbank Offered Rate" at which deposits in United States dollars are
offered by major banks in London, England, as of 11:00 a.m. London, England
time, two (2) Business Days before the first day of the respective Interest
Period, in the approximate amount of the relevant LIBOR Advance and having a
maturity approximately equal to such LIBOR Advance's Interest Period.
"LIBOR Loan" means a Loan which bears interest at a LIBOR Rate.
"LIBOR Rate" means, with respect to a LIBOR Advance for the relevant
Interest Period, the sum of (i) the quotient of (a) the LIBOR Base Rate
applicable to such Interest Period, divided by (b) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(ii) the Applicable LIBOR Rate Margin. The LIBOR Rate shall be rounded to the
next higher multiple of 1/100th of 1% if the rate is not such a multiple.
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"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment (the purpose of which is to grant a security
interest), deposit arrangement (the purpose of which is to grant a security
interest), encumbrance or other security agreement or arrangement of any kind or
nature whatsoever the purpose of which is to grant a security interest, whether
or not filed or recorded or otherwise perfected (including the interest of a
vendor or lessor under any conditional sale, any Capitalized Lease or any lease
deemed to constitute a security interest, or any other title retention
agreement).
"Loan" means, with respect to a Bank, such Bank's portion of any
Advance. For purposes of a Swing Line Advance, SunTrust's portion of such
Advance is 100%.
"Loan Documents" means this Agreement, the Notes, and any Reimbursement
Agreements, and if applicable, the Environmental Agreements, Mortgages and other
Collateral Documents.
"Lot Costs" means, with respect to each Finished Lot, the Actual Costs
to acquire and develop the Finished Lot.
"Majority Banks" means Banks in the aggregate having at least fifty-one
percent (51%) of the Aggregate Commitment, or if the Aggregate Commitment has
been terminated, Banks in the aggregate holding at least fifty-one percent (51%)
of the aggregate unpaid principal amount of the outstanding Advances.
"Material Adverse Effect" means a material adverse effect, based on
commercially reasonable standards, on (i) the business, Property, condition
(financial or otherwise), or results of operations of Borrower and Guarantors,
taken as a whole, (ii) the ability of Borrower or any Guarantor to perform its
obligations under any of the Loan Documents or the Guaranty, or (iii) the
validity or enforceability under applicable law of any of the Loan Documents or
the Guaranty or the rights or remedies of Agent, Banks or any Issuing Bank
thereunder.
"Model Unit" means a Housing Unit used and furnished for inspection by
prospective purchasers of Housing Units.
"Mortgage" means each Indenture of Mortgage, Deed of Trust, Deed to
Secure Debt, Assignment of Rents and Leases, Security Agreement and Fixture
Filing, securing the Obligations and the obligations under the Guaranty, granted
from time to time pursuant to Section 2.22 by each person owning or having any
interest in the Collateral (whether Borrower or any Guarantor) as
Trustor/Mortgagor, for the benefit of Agent on behalf of Banks, as
Beneficiary/Mortgagee, as the same may be amended or modified and in effect from
time to time, each being substantially in the form of EXHIBIT "C" attached
hereto (conformed as necessary with respect to the laws of the state where the
Collateral described therein is located).
"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement as described in Section 3(37) of
ERISA to which Borrower,
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any Guarantor or any member of the Controlled Group is a party to which more
than one employer is obligated to make contributions.
"Non-Recourse Indebtedness" with respect to any Person means
Indebtedness of such Person (i) for which 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 ninety (90) days after the acquisition of such
property and for which no other assets of such Person may be realized upon in
collection of principal or interest on such Indebtedness, or (ii) that
refinances Indebtedness described in clause (i) and for which the recourse is
limited to the same extent described in clause (i).
"Note" means a promissory note, in substantially the form of EXHIBIT
"D" hereto, duly executed by Borrower and payable to the order of a Bank in the
amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"Notice of Assignment" is defined in Section 15.3.2.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, the Facility Letter of Credit Obligations, all accrued
and unpaid fees and all expenses, reimbursements, indemnities and other
obligations of Borrower to Banks or to any Bank, Agent, any Issuing Bank or any
indemnified party hereunder arising under the Loan Documents.
"Old Indenture" means that certain Indenture, dated as of March 15,
1994, between Borrower and American Stock Transfer & Trust Company, as trustee,
pursuant to which the Old Senior Notes were issued.
"Old Senior Notes" means the 11.75% Senior Notes due December 2000 of
Borrower in the maximum aggregate principal amount of $40,000,000.00 issued
pursuant to the Old Indenture.
"Participants" is defined in Section 15.2.1.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Permitted Liens" means, as to any Property of Borrower or any of its
Subsidiaries, any of the following:
(i) Liens for taxes, assessments or governmental charges or
levies on its Property if the same (A) shall not at the time be
delinquent or thereafter can be paid without penalty, or (B) are being
contested in good faith and by appropriate proceedings and for which
adequate reserves shall have been established on its books in
accordance with GAAP.
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(ii) Liens imposed by law, such as landlord's, carriers',
warehousemen's, mechanics' and materialmen's Liens and other similar
Liens arising in the ordinary course of business with respect to
amounts that either (A) are not yet delinquent, or (B) are delinquent
but are being contested in good faith by appropriate proceedings and
for which adequate reserves shall have been established on its books in
accordance with GAAP.
(iii) Utility easements, rights of way, zoning restrictions,
covenants, reservations, and such other burdens, encumbrances or
charges against real property, or other minor irregularities of title,
as are of a nature generally existing with respect to properties of a
similar character and which do not in any material way interfere with
the use thereof or the sale thereof in the ordinary course of business
(including, without limitation, restrictive covenants of general
application created and reserved in the ordinary course of business by
a declarant of a planned residential development that require payment
of marketing, development or other fees or that reserve rights of first
refusal or repurchase options to the declarant to ensure compliance
with restrictive covenants requiring construction of a dwelling to
commence or be completed within a stated period of time).
(iv) Easements, dedications, assessment district or similar
Liens in connection with municipal financing and other similar
encumbrances or charges, reserved or vested in any governmental
authority, in each case reasonably necessary or appropriate for the
development of real property, and which are granted in the ordinary
course of the business, and which in the aggregate do not materially
burden or impair the fair market value or use of such real property (or
the project to which it is related) for the purposes for which it is or
may reasonably be expected to be held.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which Borrower, any Guarantor or any member of the Controlled Group
may have any liability.
"Presold Lot" means a Finished Lot owned by Borrower or any Guarantor
that is subject to a bona fide written agreement for sale and purchase, between
the Borrower or any Guarantor, as seller, and a Person other than an Affiliate,
as buyer, entered into in the ordinary course of business, under which a cash
earnest money deposit or down payment in an amount customary for the locale has
been paid, and that is subject only to customary contingencies to the closing of
the agreement and the buyer's purchase obligation.
"Presold Unit" means a Housing Unit owned by Borrower or any Guarantor
that is
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subject to a bona fide written agreement for sale and purchase, between the
Borrower or any Guarantor, as seller, and a Person other than an Affiliate, as
buyer, entered into in the ordinary course of business, under which a cash
earnest money deposit or down payment in an amount customary for the locale has
been paid, and that is subject only to customary contingencies to the closing of
the agreement and the buyer's purchase obligation.
"Prime Rate" means the rate per annum most recently publicly announced
by SunTrust Banks of Florida, Inc., or its successors, in Orlando, Florida, as
its "prime rate," as in effect from time to time. The Prime Rate will change on
each day the "prime rate" changes. The "prime rate" is not necessarily the best
or lowest rate offered by said bank, and said bank may lend to its customers at
rates that are at, above, or below its "prime rate."
"Property" of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.
"Public Indebtedness" means Indebtedness evidenced by notes,
debentures, or other similar instruments issued after the date of this Agreement
pursuant to either (i) a registered public offering or (ii) a private placement
of such instruments in accordance with an exemption from registration (other
than Indebtedness evidenced by the Senior Notes, the Old Senior Notes, or any
Refinancing Indebtedness with respect to any of the foregoing) under the
Securities Act of 1933 and/or the Securities Exchange Act of 1934 or similar
law.
"Purchasers" is defined in Section 15.3.1.
"Rate Hedging Obligations" of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, forward rate currency or interest rate options, puts and warrants,
(ii) any arrangement with any other Person whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such Person calculated by
applying a fixed or a floating rate of interest on the same notional amount,
including without limitation, interest rate swaps, caps, floors, collars and
similar arrangements, and (iii) any and all cancellations, buy backs, reversals,
terminations or assignments of any of the foregoing.
"Refinanced Loans" means, severally and collectively, the loans listed
on SCHEDULE "1" hereto.
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"Refinancing Indebtedness" means Indebtedness that refunds, refinances
or extends any Indebtedness (or that refunds, refinances or extends any refund,
refinancing or extension of such Indebtedness), but only to the extent that:
(i) the Refinancing Indebtedness is subordinated to or pari
passu with the Obligations (or Guarantors' obligations under the
Guaranty, as applicable) to the same extent as the Indebtedness being
refunded, refinanced or extended,
(ii) the Refinancing Indebtedness is scheduled to mature no
earlier than the earlier of (A) the then current maturity date of such
Indebtedness, or (B) the Facility Maturity Date,
(iii) such Refinancing Indebtedness is in an aggregate amount
that is equal to or less than the sum of the aggregate amount then
outstanding plus all amounts committed but undisbursed under the
Indebtedness being refunded, refinanced or extended,
(iv) the Person or Persons liable for the payment of such
Refinancing Indebtedness are the same Person or Persons (or
successor(s) thereto) that were liable for the Indebtedness being
refunded, refinanced or extended when such Indebtedness was initially
incurred,
(v) such Refinancing Indebtedness is incurred within 120 days
after the Indebtedness being refunded, refinanced or extended is so
refunded, refinanced or extended, and
(vi) in the case of any Refinancing Indebtedness of the Old
Senior Notes, Senior Notes, or any other Public Indebtedness, the terms
and conditions of the Refinancing Indebtedness are no more restrictive
or adverse to Borrower or its Subsidiaries or the rights of the Banks
under this Agreement and other Loan Documents than those in the
Indenture on the date it was issued (including, without limitation,
with respect to the ability to incur Indebtedness and grant Liens to
secure Indebtedness, financial performance, and events of default).
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation G", "Regulation U" and "Regulation X" mean Regulation G,
Regulation U, and Regulation X, respectively, of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of
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purchasing or carrying margin stocks applicable to member banks of the Federal
Reserve System.
"Related Business" means (i) the for sale home building business, or
(ii) a residential mortgage lending or title insurance business of Borrower or
its Subsidiaries, in each case substantially as in existence on the date hereof,
all as reasonably determined by Agent.
"Rejecting Bank" is defined in Section 2.21(b).
"Reimbursement Agreement" means, with respect to a Facility Letter of
Credit, such form of application therefor and form of reimbursement agreement
therefor (whether in a single or several documents, taken together) as an
Issuing Bank may employ in the ordinary course of business for its own account,
with such modifications thereto as may be agreed upon by such Issuing Bank and
Borrower and as are not materially adverse (in the reasonable judgment of such
Issuing Bank and Agent) to the interests of Banks; provided, however, in the
event of any conflict between the terms of any Reimbursement Agreement and this
Agreement, the terms of this Agreement shall control.
"Replacement Bank" is defined in Section 2.23.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such Section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within thirty (30)
days of the occurrence of such event; provided, however, that a failure to meet
the minimum funding standard of Section 412 of the Code and of Section 302 of
ERISA shall be a Reportable Event regardless of the issuance of any such waiver
of the notice requirement in accordance with either Section 4043(a) of ERISA or
waiver of the funding requirements under Section 412(d) of the Code.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities (as defined therein).
"Sales Center" means a sales center used to market and promote sales of
Housing Units.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Senior Debt" means the Senior Notes or, if the Senior Notes are
refinanced, the Refinancing Indebtedness with respect thereto.
"Senior Debt Rating" means the publicly announced ratings by any two
(2) of the following nationally recognized rating agencies (provided, however,
that at least one (1) of the two (2) agencies shall be Moody's Investors
Service, Inc. or Standard & Poor's Corporation):
22
<PAGE>
Moody's Investors Service, Inc., Standard & Poor's Corporation, Fitch's
Investment Service, and Duff & Phelps Credit Rating Co., as selected by
Borrower, on Borrower's Senior Debt; provided, however, (i) except as provided
in clause (ii), if the two ratings are not identical, the Senior Debt Rating
shall be the lower of the two ratings, and (ii) if more than one rating
gradation exists between the two ratings, the Senior Debt Rating shall be the
rating that is one gradation below the higher of the two ratings, and provided
further that, notwithstanding clauses (i) and (ii), if the rating by Standard &
Poor's Corporation or Moody's Investors Service, Inc. is B or B2 respectively,
and the rating issued by the second of the two (2) selected agencies is lower,
then the Senior Debt Rating shall be the B or B2 rating, as applicable. The
Senior Debt Rating shall change if and when such rating(s) change.
"Senior Notes" means the unsecured 9.25% Senior Notes due 2008 of
Borrower in the maximum aggregate principal amount of $100,000,000.00 issued
pursuant to the Indenture.
"Single Employer Plan" means a Plan maintained by Borrower, any
Guarantor or any member of the Controlled Group for employees of Borrower, any
Guarantor or any member of the Controlled Group.
"Spec Lot" means a Finished Lot that is not a Presold Lot.
"Spec Unit" means any Housing Unit owned by any Guarantor that is not a
Presold Unit or a Model Unit.
"Subordinated Indebtedness" means any Indebtedness of Borrower the
payment of which is subordinated to payment of the Obligations to the reasonable
satisfaction of Majority Banks.
"Subsidiary" of a Person means (i) in the case of any corporation, a
corporation of which shares of stock having ordinary voting power to elect at
least a majority of the board of directors or other managers of which shall at
the time be owned, or the management of which is otherwise controlled, directly
or indirectly, by such Person or through one or more intermediaries, or both, by
such Person, or (ii) in the case of any partnership, association, joint venture,
limited liability company or similar business organization, any partnership,
association, joint venture, limited liability company or similar business
organization of which ownership interests having ordinary voting power to elect
at least a majority of the managers of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a direct or indirect Subsidiary of Borrower.
"Substantial Portion" means, with respect to the Property of Borrower
and Guarantors, taken as a whole, Property which represents more than 10% of the
book value of the assets of Borrower and Guarantors, as shown in the
consolidated financial statements of Borrower and its Subsidiaries as of the
beginning of the fiscal quarter in which such determination is made.
"SunTrust" means SunTrust Bank, South Florida, National Association, in
its individual
23
<PAGE>
capacity, and its successors.
"Swing Line Advances" is defined in Section 2.19.
"Swing Line Advance Maturity Date" means that day that is the five (5)
Business Days following the date on which a Swing Line Advance was funded by
SunTrust.
"Transferee" is defined in Section 15.4.
"Type" means, with respect to any Advance, its nature as a Floating
Rate Advance or LIBOR Advance.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested nonforfeitable benefits under all Single Employer Plans
exceeds the fair market value of the assets of such Plans allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans, using the actuarial methods and assumptions utilized in the actuarial
report for each such Plan as of such date.
"Unmatured Event of Default" means an event which but for the lapse of
time or the giving of notice, or both, would constitute an Event of Default.
"Unused Commitment" means, at any date with respect to any Bank, the
amount (if any) by which such Bank's Commitment exceeds the sum of (i) the
outstanding principal balance of such Bank's Loans as of such date, plus (ii)
such Bank's ratable share (determined in accordance with Section 4.6) of the
outstanding amount of the Facility Letters of Credit.
"Unused Commitment Fee" means a fee payable by Borrower to each Bank
with respect to such Bank's Unused Commitment, calculated in accordance with
Section 2.5(b).
"Warehouse Facility" means one or more commitments from one or more
banks or other lending institutions to lend funds for the purpose of financing
the making of residential mortgage loans originated by Borrower or any of its
Subsidiaries.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of
the outstanding voting securities (or the election of the board of directors) of
which shall at the time be beneficially owned (within the meaning of Rule 13d-3
of the Securities Exchange Act of 1934, as amended) directly or indirectly, by
such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such
Person and one or more Wholly-Owned Subsidiaries of such Person, or (ii) any
partnership, association, joint venture, limited liability company or similar
business organization 100% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
24
<PAGE>
ARTICLE II
THE CREDITS
2.1 COMMITMENT. From and including the date of this Agreement and prior
to the Facility Maturity Date, each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make Loans and to participate
pursuant to Section 4.6 in the issuance of Facility Letters of Credit to
Borrower from time to time in amounts not to exceed in the aggregate at any one
time outstanding the amount of its Commitment; provided, however, that
notwithstanding anything to the contrary in this Agreement (including, without
limitation, in Section 2.19(d) or 4.6(b)) (i) a Bank shall not be required to
make any Loan or Loans in excess of the amount of such Bank's then Available
Credit, and (ii) the aggregate principal amount of all Advances outstanding plus
the aggregate amount of the Facility Letter of Credit Obligations outstanding
plus the Aggregate Senior Indebtedness outstanding at any time and from time to
time shall not exceed the Borrowing Base determined as of the most recent
Inventory Valuation Date. Subject to the terms of this Agreement, Borrower may
borrow, repay and reborrow at any time prior to the Facility Maturity Date. The
Commitments to lend hereunder shall expire on the Facility Maturity Date.
2.2 REQUIRED PAYMENTS. Any outstanding Advances and all other unpaid
Obligations shall be paid in full by Borrower on the Facility Maturity Date.
Additionally, if for any reason at any time either (i) the principal amount of
all Advances plus the aggregate amount of the Facility Letter of Credit
Obligations outstanding exceeds the Aggregate Commitment, or (ii) the aggregate
principal amount of all Advances outstanding plus the aggregate amount of the
Facility Letter of Credit Obligations outstanding plus the Aggregate Senior
Indebtedness outstanding exceeds the Borrowing Base determined as of the most
recent Inventory Valuation Date, then:
(a) Borrower shall, within five (5) Business Days after notice
from Agent, make a payment to Agent for the benefit of Banks in an amount equal
to such excess principal amount; and
(b) Until Borrower shall have made the payment to Agent
described in subparagraph (a) above, Borrower shall not, directly or indirectly,
declare, make or pay, or incur any liability to make or pay, or cause or permit
to be declared, made or paid, any Dividend. The foregoing paragraph will not
prevent the payment of any Dividend by Borrower within sixty (60) days after the
date of its declaration if such Dividend could have been made on the date of its
declaration in compliance with the foregoing provisions.
The amount due pursuant to clause (a) of this Section 2.2 (the "Amount
Due") shall be paid to and used by Agent first to repay outstanding Advances. If
the Amount Due is payable at a time when the Amount Due exceeds the Advances
outstanding, then the Amount Due shall be paid to and used by Agent first to
repay Advances, next to repay amounts paid by any Issuing
25
<PAGE>
Bank on any Facility Letter of Credit to the extent (if any) not reimbursed by
Borrower ("Unreimbursed LOC Payments"), and any balance shall be held by Agent
as collateral security for and used by Agent to repay Unreimbursed LOC Payments
as they may arise in connection with any Facility Letters of Credit outstanding
from time to time, without notice to Borrower. Any portion of such balance
retained for collateral security as aforesaid need not be segregated by Agent
but shall bear interest at a rate selected by Agent substantially similar to
rates generally offered by financial institutions on similar funds for similar
purposes (the amounts so held by Agent from time to time, including such
interest, are hereinafter referred to as the "Collateral Security Funds"). To
the extent Agent holds any Collateral Security Funds at any time when an Amount
Due is no longer required pursuant to clause (a), the remaining balance of the
Collateral Security Funds not used for repayment of Unreimbursed LOC Payments
shall be returned to Borrower by Agent but only if no Unmatured Event of Default
or Event of Default exists. If any Unmatured Event of Default or Event of
Default shall ever occur, then all Collateral Security Funds shall be applied by
Agent toward repayment of the Obligations without notice to Borrower. The Agent
and each Bank (including each Issuing Bank) are hereby granted a first priority
lien on and security interest in all amounts paid by Borrower or held by Agent
(including interest earned) for the purposes expressed in this paragraph.
Sections 2.7, 2.13, 2.15, 3.4 and other provisions of this Agreement
contain further provisions regarding payment.
2.3 RATABLE LOANS. Each Advance hereunder, including without
limitation, any Advance made by the Banks pursuant to Section 2.19(d), but
excluding Swing Line Advances, shall consist of Loans made by the several Banks
ratably in proportion to the ratio that their respective Commitments bear to the
Aggregate Commitment. Swing Line Advances shall consist of Loans made by
SunTrust.
2.4 TYPES OF ADVANCES. The Advances may be Floating Rate Advances or
LIBOR Advances, or a combination thereof, selected by Borrower in accordance
with Sections 2.8 and 2.9.
2.5 FEES; REDUCTION IN COMMITMENT.
(a) AGENCY FEE. Borrower shall pay to Agent annually for the
account of Agent (and not the Banks) an agency fee in the amount set forth in
the commitment letter (including the letter agreement incorporated therein)
dated March 9, 1998 between Agent, SunTrust Equitable Securities Corporation,
and Borrower (signed and accepted by Borrower on March 11, 1998). This fee shall
be paid by Borrower to Agent in advance, contemporaneously with the execution of
this Agreement, and annually thereafter until (and excluding) the Facility
Maturity Date, and shall be non-refundable in any event.
(b) UNUSED COMMITMENT FEE. Borrower agrees to pay to Agent for
the account of each Bank an Unused Commitment Fee, at a rate per annum equal to
the Applicable
26
<PAGE>
Unused Commitment Rate, calculated on the basis of a 360-day year in accordance
with this Section from the date hereof and to and including the Facility
Maturity Date, and payable quarterly in arrears as of the first day of each
January, April, July and October hereafter and on the Facility Maturity Date.
The Unused Commitment Fee shall be due and payable within ten (10) days after
Borrower's receipt of a statement therefor from Agent. For each quarter (or
portion thereof), the Unused Commitment Fee shall be equal to (A) such Bank's
average daily Commitment during such quarter (or portion thereof) minus (B) such
Bank's "average daily outstandings" for the quarter (or portion thereof) with
respect to which the Unused Commitment Fee is being computed, with the resulting
difference (the difference is hereinafter referred to as the "Unused
Commitment") multiplied by (C) the Applicable Unused Commitment Rate, and the
final product multiplied by (D) the quotient obtained by dividing the actual
number of days elapsed during the quarter by three hundred sixty (360);
PROVIDED, HOWEVER, that during the first five hundred forty (540) day period
following the date of this Agreement, the Unused Commitment Fee shall be equal
to the amount calculated as follows if (i) Borrower has not reduced the
Aggregate Commitment in accordance with Section 2.5 (d), (ii) Borrower has used
Public Indebtedness permitted by clause (x) (b) of Section 8.2 and not any
Advances or other funds to pay, redeem and retire all of the Old Senior Notes in
full, and (iii) no Unmatured Event of Default or Event of Default exists: (A)
the Unused Commitment multiplied by (B) (i) .05% if the Unused Commitment is
less than or equal to such Banks' ratable share of $40,000,000.00 (in proportion
to the ratio that its Commitment bears to the Aggregate Commitment), or (ii) if
the Unused Commitment is greater than such Banks' ratable share of
$40,000,000.00 (in proportion to the ratio that its Commitment bears to the
Aggregate Commitment), then by .05% with respect to the Bank's ratable share of
$40,000,000.00 (in proportion to the ratio that its Commitment bears to the
Aggregate Commitment) and by the Applicable Unused Commitment Rate with respect
to the difference between the Unused Commitment and the Bank's ratable share of
$40,000,000.00 (in proportion to the ratio that its Commitment bears to the
Aggregate Commitment), and the final product multiplied by (C) the quotient
obtained by dividing the actual number of days elapsed during the quarter by
three hundred sixty (360).
As used herein, "average daily outstandings" means the sum of (i) the
outstanding principal balance of such Bank's Loans (including, with respect to
SunTrust only, the outstanding principal balance of Swing Line Advances) plus
(ii) such Bank's ratable share (determined in accordance with Section 4.6) of
the outstanding amount of the Facility Letters of Credit, all calculated for
each day during the quarter (or portion thereof) for which the fee is being
computed, divided by the number of days in that quarter (or portion thereof).
The Unused Commitment Fee shall continue to be payable irrespective of whether
the Conversion Period is in effect. All accrued Unused Commitment Fees shall be
payable on the effective date of any termination of the obligations of Banks to
make Loans hereunder.
(c) EXTENSION FEE. If the Facility Maturity Date is extended
pursuant to the provisions of Section 2.21, then Borrower shall pay to Agent an
extension fee in the amount set forth in the commitment letter (including the
letter agreement incorporated therein) dated March 9, 1998 between Agent,
SunTrust Equitable Securities Corporation, and Borrower (signed and accepted by
Borrower on March 11, 1998). The extension fee shall be paid by Borrower to
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<PAGE>
Agent in advance, within five (5) Business Days after Agent notifies Borrower of
the extension of the Facility Maturity Date pursuant to Section 2.21(a). The
extension fee shall be non-refundable in any event. Agent shall pay to each Bank
(other than SunTrust) as its portion of the extension fee paid by Borrower an
amount determined in accordance with the following schedule, based on such
Bank's total Commitment at the time of Agent's receipt of the fee, it being
recognized that the entire balance of the fee not payable to Banks other than
SunTrust in accordance with the following schedule shall be retained by SunTrust
as its portion of the extension fee:
- ---------------------------------------- ---------------------------------------
BANK'S EXTENSION FEE
COMMITMENT (as a percentage of Bank's Commitment)
- ---------------------------------------- ---------------------------------------
$30,000,000.00 or more .05 %
- ---------------------------------------- ---------------------------------------
$20,000,000.00 to $29,999,999.99 .035 %
- ---------------------------------------- ---------------------------------------
$10,000,000.00 to $19,999,999.99 .0175 %
- ---------------------------------------- ---------------------------------------
(d) REDUCTIONS IN AGGREGATE COMMITMENT. Borrower may
permanently reduce the Aggregate Commitment in whole, or in part in integral
multiples of $5,000,000.00 at any time or from time to time, upon at least five
(5) Business Days' written notice to Agent, which notice shall specify the
amount of any such reduction; provided, however, that the amount of the
Aggregate Commitment may not be reduced below the sum of (i) the aggregate
principal amount of the outstanding Advances plus (ii) the Facility Letter of
Credit Obligations. Any reduction of the Aggregate Commitment in part shall
reduce each Bank's Commitment ratably (in proportion to the ratio that its
respective Commitment bears to the Aggregate Commitment). The Aggregate
Commitment, once reduced or terminated, may not be reinstated.
2.6 MINIMUM AMOUNT OF EACH ADVANCE. Each LIBOR Advance shall be in the
minimum amount of $2,000,000.00 and in multiples of $1,000,000.00 if in excess
thereof. Each Floating Rate Advance shall be in the minimum amount of
$1,000,000.00 and in multiples of $100,000.00 if in excess thereof. There shall
be no required minimum or multiple amount for any Swing Line Advance.
2.7 OPTIONAL PRINCIPAL PAYMENTS. Borrower may at any time or from time
to time pay, without penalty or premium, all Floating Rate Advances, or, in a
minimum aggregate amount of $100,000.00 or any integral multiple of $50,000.00
in excess thereof (except with respect to Swing Line Advances), any portion of
the outstanding Floating Rate Advances upon one (1) Business Day's prior notice
to Agent, given not later than 11:00 a.m. West Palm Beach, Florida time.
Borrower may, (i) upon one (1) Business Day's prior notice to Agent, given not
later than 11:00 a.m. West Palm Beach, Florida time, pay, without penalty or
premium, any LIBOR Advance in full on the last day of the Interest Period for
such LIBOR Advance, and (ii)
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<PAGE>
upon three (3) Business Days' prior notice to Agent, given not later than 11:00
a.m. West Palm Beach, Florida time, prepay any LIBOR Advance in full (or, if
less, in a minimum amount of $1,000,000.00 and integral multiples of $100,000.00
in excess thereof) prior to the last day of the Interest Period for such LIBOR
Advance, provided that Borrower shall also pay at the time of such prepayment
all amounts payable with respect thereto pursuant to Section 3.4 hereof.
Sections 2.2, 2.13, and 2.15 and other provisions of this Agreement contain
further provisions regarding payment.
2.8 METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR NEW ADVANCES.
Borrower, when requesting an Advance, shall select the Type of Advance and, in
the case of each LIBOR Advance, the Interest Period applicable to each Advance
from time to time. Borrower shall give Agent irrevocable notice (a "Borrowing
Notice") in the form of EXHIBIT "E" not later than (a) 11:00 a.m., West Palm
Beach, Florida time, one (1) Business Day before the Borrowing Date of each
Floating Rate Advance (except a Swing Line Advance), (b) 11:00 a.m., West Palm
Beach, Florida time, three (3) Business Days before the Borrowing Date of each
LIBOR Advance, and (c) 1:00 p.m., West Palm Beach, Florida time, on the
Borrowing Date of each Swing Line Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day, of such
Advance,
(ii) whether the Advance is a Swing Line Advance,
(iii) the aggregate amount of such Advance,
(iv) the Type of Advance selected; provided, however, that the
aggregate number of LIBOR Advances outstanding at any one time shall
not exceed ten (10), and further provided that any Swing Line Advance
shall be a Floating Rate Advance, and
(v) in the case of each LIBOR Advance, the Interest Period
applicable thereto.
With respect to each Floating Rate Advance (except Swing Line Advances)
and each LIBOR Advance, Agent shall notify Banks by 4:00 p.m., West Palm Beach,
Florida time, on the date Agent receives the Borrowing Notice as described
above. With respect to such Advances, not later than 11:00 a.m., West Palm
Beach, Florida time, on each Borrowing Date, each Bank shall make available its
Loan or Loans, in funds immediately available in West Palm Beach, Florida to
Agent at its address specified pursuant to Article XVI. Agent will make the
funds so received from Banks available to Borrower at Agent's aforesaid address.
Disbursements of all Advances (other than Swing Line Advances) to Borrower may
be
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<PAGE>
made not more frequently than one time per Business Day. Disbursements of all
Swing Line Advances to Borrower may be made not more frequently than one time
per Business Day, or on a more frequent basis as SunTrust may agree.
2.9 CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES. Floating Rate
Advances shall continue as Floating Rate Advances unless and until such Floating
Rate Advances are converted into LIBOR Advances. Each LIBOR Advance shall
continue as a LIBOR Advance until the end of the then applicable Interest Period
therefor, at which time the LIBOR Advance shall be automatically converted into
a Floating Rate Advance unless Borrower shall have given Agent a
Conversion/Continuation Notice in compliance with this Section requesting that,
at the end of such Interest Period, the LIBOR Advance either continue as a LIBOR
Advance for the same or another Interest Period or be repaid. Subject to the
other terms of this Agreement, Borrower may elect from time to time to convert
all or any part of an Advance of any Type into any other Type or Types of
Advances; provided, however, that any conversion of any LIBOR Advance may be
made on, and only on, the last day of the Interest Period applicable thereto,
and further provided that the aggregate number of LIBOR Advances outstanding at
any one time shall not exceed ten (10). Borrower shall give Agent irrevocable
notice (a "Conversion/Continuation Notice") in a Borrowing Notice of each
conversion of an Advance or continuation of a LIBOR Advance not later than 11:00
a.m., West Palm Beach, Florida time, at least one (1) Business Day, in the case
of a conversion into a Floating Rate Advance, or three (3) Business Days, in the
case of a conversion into or continuation of a LIBOR Advance, prior to the date
of the requested conversion or continuation, specifying:
(i) the requested date which shall be a Business Day, of such
conversion or continuation;
(ii) the aggregate amount and Type of the Advance which is to
be converted or continued; and
(iii) the amount and Type(s) of Advance(s) into which such
Advance is to be converted or continued and, in the case of a
conversion into or continuation of a LIBOR Advance, the Interest Period
applicable thereto.
2.10 CHANGES IN INTEREST RATE, ETC. Each Floating Rate Advance shall
bear interest on the outstanding principal amount thereof, for each day, from
and including the date the Advance is made or is converted from a LIBOR Advance
into a Floating Rate Advance pursuant to Section 2.9 to but excluding the date
it becomes due or is converted into a LIBOR Advance pursuant to Section 2.9
hereof, at a rate per annum equal to the Floating Rate for such day. Changes in
the rate of interest on any Advance maintained as a Floating Rate Advance will
take effect simultaneously with each change in the Floating Rate. Each LIBOR
Advance shall bear interest, from and including the first day of the Interest
Period applicable thereto to (but not including) the last day of such Interest
Period, at its applicable LIBOR Rate. No Interest Period may end after the
Facility Maturity Date.
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2.11 DETERMINATION OF APPLICABLE LIBOR RATE MARGIN AND APPLICABLE
UNUSED COMMITMENT RATE.
(a) SENIOR DEBT RATING. The Applicable LIBOR Rate Margin and
the Applicable Unused Commitment Rate shall be determined by reference to the
Senior Debt Rating, in accordance with the following table:
<TABLE>
<CAPTION>
- ------------------------------- ---------------------- ---------------------- ------------------------
SENIOR DEBT RATING SENIOR DEBT RATING APPLICABLE LIBOR APPLICABLE UNUSED
(STANDARD & POOR'S OR MOODY'S) (DUFF & PHELPS OR RATE MARGIN (%) COMMITMENT RATE (%)
FITCH)
- ------------------------------- ---------------------- ---------------------- ------------------------
<S> <C> <C> <C>
BB/Ba2 or higher BB/BB 1.50 0.25
- ------------------------------- ---------------------- ---------------------- ------------------------
BB-/Ba3 BB-/BB- 1.75 0.30
- ------------------------------- ---------------------- ---------------------- ------------------------
B+/B1 B+/B+ 2.00 0.35
- ------------------------------- ---------------------- ---------------------- ------------------------
B/B2 B/B 2.25 0.375
- ------------------------------- ---------------------- ---------------------- ------------------------
</TABLE>
(b) ADJUSTMENT OF MARGINS. The Applicable Unused Commitment
Rate and Applicable LIBOR Rate Margin shall be adjusted, as applicable from time
to time, effective on the first Business Day after any change in the Senior Debt
Rating.
(c) CHANGES TO RATINGS. If the rating system used by any
rating agency shall change, then Borrower and Banks, acting through Agent, shall
negotiate in good faith to amend the references to specific ratings in the
foregoing table to reflect such changed rating system.
2.12 TYPES OF ADVANCES AND RATES APPLICABLE DURING DEFAULT.
Notwithstanding anything to the contrary contained in Section 2.8, 2.9 or 2.10,
or in any other provision of this Agreement:
(i) during the continuance of an Unmatured Event of
Default the Majority Banks may, at their option, by notice to Borrower
(which notice may be revoked at the option of the Majority Banks
notwithstanding any provision of Section 11.2 requiring unanimous
consent of Banks to changes in interest rates), and declare that no
Advance may be made as or converted into a LIBOR Advance; and
(ii) during the continuance of an Event of Default,
the Majority Banks may, at their option, by notice to Borrower (which
notice may be revoked at the option of the Majority Banks
notwithstanding any provision of Section 11.2 requiring unanimous
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<PAGE>
consent of Banks to changes in interest rates), declare that (a) no
Advance may be made as converted into or continued as a LIBOR Advance
after expiration of the applicable Interest Period, (b) each LIBOR
Advance shall bear interest for the remainder of the applicable
Interest Period at the rate otherwise applicable to such Interest
Period plus 3% per annum, and (c) each Floating Rate Advance shall bear
interest at a rate per annum equal to the Floating Rate otherwise
applicable to the Floating Rate Advance plus 3% per annum.
2.13 METHOD OF PAYMENT. All payments of the Obligations shall be made,
without setoff, deduction, or counterclaim, in immediately available funds to
Agent at Agent's address specified pursuant to Article XVI, or at any other
Lending Installation of Agent specified in writing by Agent to Borrower, by 1:00
p.m. (local time at the place of receipt) on the date when due (or with respect
to Swing Line Advances, in accordance with Section 2.19). If any payment of
principal of or interest on an Advance shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall be included in computing interest in connection
with such payment. Except for payments of Swing Line Advances or where this
Agreement otherwise indicates that a payment is for the account of a specific
Bank or the Agent, all payments of the Obligations shall be applied ratably by
Agent among Banks, in proportion to the ratio that each Bank's Commitment bears
to the Aggregate Commitment. Each payment delivered to Agent for the account of
any Bank shall be delivered promptly by Agent to such Bank in the same type of
funds that Agent received at its address specified pursuant to Article XVI or at
any Lending Installation specified in a notice received by Agent from such Bank.
If Agent receives, for the account of a Bank, a payment from Borrower and fails
to remit such payment to the Bank on the Business Day such payment is received
by Agent (if received by 1:00 p.m., West Palm Beach, Florida time) or on the
next Business Day (if received after 1:00 p.m., West Palm Beach, Florida time),
Agent shall pay to such Bank interest on such payment at a rate per annum equal
to the Federal Funds Effective Rate for each day for which such payment is so
delayed.
2.14 NOTES; TELEPHONIC NOTICES. Each Bank is hereby authorized to
record the principal amount of each of its Loans and each repayment on a
schedule attached to its Note; provided, however, that the failure to so record
shall not affect Borrower's obligations under the Note. Borrower hereby
authorizes Agent to extend, convert or continue Advances, effect selections of
Types of Advances and to transfer funds based on telephonic notices made by any
person or persons who Agent in good faith believes to be acting on behalf of
Borrower. Borrower agrees to deliver promptly to Agent a written confirmation,
if such confirmation is requested by Agent, of each telephonic notice signed by
an Authorized Officer of Borrower. If the written confirmation differs in any
material respect from the action taken by Agent, the records of Agent shall
govern absent manifest error.
2.15 INTEREST PAYMENT DATES; INTEREST BASIS. Interest on all Advances
shall be calculated on the basis of a 360 day year, based on the actual days
elapsed. Interest accrued on each Floating Rate Advance and Swing Line Advance
shall be paid on the first day of each
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calendar month and interest accrued on each LIBOR Advance shall be paid at the
end of each Interest Period, commencing with the first such date to occur after
the date hereof, and shall be payable, in arrears. Interest shall also be
payable in arrears on the Facility Maturity Date and on any date on which an
Advance is prepaid, whether due to acceleration or otherwise. Interest shall be
payable for the day an Advance is made but not for the day of any payment on the
amount paid if payment is received prior to 1:00 p.m. (local time at the place
of receipt). Section 2.13 and other provisions of this Agreement contain further
provisions regarding payments of interest.
2.16 NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. Promptly after receipt thereof, Agent will notify each
Bank of the contents of each Aggregate Commitment reduction notice, Borrowing
Notice, Conversion/Continuation Notice, and repayment notice received by it
hereunder. Agent will notify each Bank of the interest rate applicable to each
LIBOR Advance promptly upon determination of such interest rate and will give
each Bank prompt notice of each change in the Floating Rate, the Applicable
LIBOR Rate Margin or the Applicable Unused Commitment Rate.
2.17 LENDING INSTALLATIONS. Each Bank may book its Loans at any Lending
Installation selected by such Bank and may change its Lending Installation from
time to time. All terms of this Agreement shall apply to any such Lending
Installation and the Notes shall be deemed held by each Bank for the benefit of
such Lending Installation. Each Bank may, by written or telex notice to Agent
and Borrower, designate a Lending Installation through which Loans will be made
by it and for whose account Loan payments are to be made.
2.18 NON-RECEIPT OF FUNDS BY AGENT. Unless Borrower or a Bank, as the
case may be, notifies Agent prior to the date on which such payment is due to
Agent of (i) in the case of a Bank, the proceeds of a Loan or (ii) in the case
of Borrower, a payment of principal, interest, fees or other amounts due under
the Loan Documents to Agent for the account of Banks, that it does not intend to
make such payment, Agent may assume that such payment has been made. Agent may,
but shall not be obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If Borrower or such Bank,
as the case may be, has not in fact made such payment to Agent, the recipient of
such payment shall, on demand by Agent, repay to Agent the amount so made
available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by Agent until
the date Agent recovers such amount at a rate per annum equal to (a) in the case
of payment by a Bank, the Federal Funds Effective Rate for such day or (b) in
the case of payment by Borrower, the interest rate applicable to the relevant
Advance.
2.19 SWING LINE. Notwithstanding the minimum amount of an Advance that
may be requested and the minimum amount of an Advance that may be repaid under
this Agreement, Banks desire for SunTrust to fund Advances for Borrower in
amounts that may be less than the minimum Advance amounts required under Section
2.6, and Banks desire to permit Borrower to
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repay Advances in amounts that may be less than the minimum repayment amounts
required under Section 2.7. Such Advances made pursuant to this Section 2.19
shall be deemed to be Advances for purposes of this Agreement and are referred
to herein as "Swing Line Advances." Swing Line Advances shall be requested,
advanced, and repaid in accordance with the provisions and limitations of this
Agreement relating to all Advances, subject to the following:
(a) AGGREGATE LIMIT. The aggregate amount of all outstanding
Swing Line Advances shall not exceed at any one time $10,000,000.00.
(b) FLOATING RATE ADVANCES. All Swing Line Advances shall be
Floating Rate Advances.
(c) FUNDING SWING LINE ADVANCES. Swing Line Advances shall be
funded by SunTrust pursuant to the procedures set forth in Section 2.8 of this
Agreement. The principal amount of each Swing Line Advance, together with all
accrued interest, shall be repaid by Borrower to SunTrust in same day funds by
1:00 p.m. (or such later time as may be acceptable to Agent), West Palm Beach,
Florida time, on the Swing Line Advance Maturity Date. Additionally, if the
aggregate principal amount of all outstanding Swing Line Advances exceeds
$10,000,000.00, Borrower shall pay to SunTrust the excess amount in same day
funds by 1:00 p.m., West Palm Beach, Florida time, on the first Business Day
following the day that the excess amount occurs.
(d) REPAYMENT OF SWING LINE ADVANCES. If Borrower fails to pay
any Swing Line Advances on the applicable Swing Line Advance Maturity Date, then
such Advances shall no longer be Swing Line Advances, but shall continue to be
Floating Rate Advances for purposes of this Agreement. Each Bank shall be deemed
to have irrevocably and unconditionally purchased and received from Agent an
undivided interest and participation (ratably in proportion to the ratio that
such Bank's Commitment bears to the Aggregate Commitment) in such Advances. In
such event, as of 11:59 p.m., West Palm Beach, Florida time, on the Swing Line
Advance Maturity Date, Agent shall notify each Bank of the total principal
amount of all matured Swing Line Advances and each Bank's ratable share thereof.
Upon receipt of such notice (whether or not delinquent), each Bank shall
promptly and unconditionally pay to Agent for the account of SunTrust the amount
of such Bank's share (ratably in proportion to the ratio that such Bank's
Commitment bears to the Aggregate Commitment) of such payment in same day funds,
and Agent shall pay such amount, and any other amounts received by Agent for
SunTrust's account pursuant to this Section 2.19(d), to SunTrust, in accordance
with the payment provisions of Section 2.13. If Agent so notifies such Bank
prior to 11:00 a.m., West Palm Beach, Florida time, on any Business Day, such
Bank shall make available to Agent for the account of SunTrust such Bank's share
of the amount of such payment on such Business Day in same day funds. If
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Agent notifies such Bank after 11:00 a.m., West Palm Beach, Florida time, on any
Business Day, such Bank shall make available to Agent for the account of
SunTrust such Bank's share of the amount of such payment on the next succeeding
Business Day in same day funds. If and to the extent such Bank shall not have so
made its share of the amount of such payment available to Agent for the account
of SunTrust, such Bank agrees to pay to Agent for the account of SunTrust
forthwith on demand such amount, together with interest thereon, for each day
from the date such payment was first due until the date such amount is paid to
Agent for the account of SunTrust, at the Federal Funds Effective Rate. The
failure of any Bank to make available to Agent for the account of SunTrust such
Bank's share of any such payment shall not relieve any other Bank of its
obligation hereunder to make available to Agent for the account of SunTrust its
share of any payment on the date such payment is to be made.
(e) ADVANCES. The payments made by Banks to SunTrust in
reimbursement of Swing Line Advances shall constitute, and Borrower hereby
expressly acknowledges and agrees that such payments shall constitute, Advances
hereunder to Borrower and such payments shall for all purposes be treated as
Advances to Borrower (notwithstanding that the amounts thereof may not comply
with the provisions of Section 2.6 and 2.7). Such Advances shall be Floating
Rate Advances, subject to Borrower's rights to convert the Advance to another
Type in accordance with this Article II.
2.20 WITHHOLDING TAX EXEMPTION. At least five (5) Business Days prior
to the first date on which interest or fees are payable hereunder for the
account of any Bank, each Bank (if any) that is not incorporated under the laws
of the United States of America, or a state thereof, agrees that it will deliver
to each of Borrower and Agent two (2) duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 (or any more current form then in
use), certifying in either case that such Bank is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States federal taxes and an Internal Revenue Service Form W-8 or W-9 (or
any more current form then in use) entitling such Bank to receive a complete
exemption from United States tax backup withholding. Each Bank which so delivers
a Form 1001 or 4224 (or any more current form then in use) further undertakes to
deliver to each of Borrower and Agent two (2) additional copies of such form (or
any more current form then in use) on or before the date that such form expires
or becomes obsolete or after the occurrence of any event requiring a change in
the most recent forms so delivered by it, and such amendments thereto or
extensions or renewals thereof as may be reasonably requested by Borrower or
Agent, in each case certifying that such Bank is entitled to receive payments
under this Agreement and the Notes without deduction or withholding of any
United States federal taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Bank from duly completing and
delivering any such form with respect to it and such Bank advises Borrower and
Agent that it is not capable of receiving payments without any deduction or
withholding of United States federal tax. If a Bank does not provide duly
executed forms to Borrower and Agent within the time periods set forth in this
Section, Borrower or Agent shall withhold taxes from payments to such Bank at
the applicable statutory rates and Borrower shall not be required to pay any
additional amounts as a result of such withholding. Upon the
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reasonable request of Borrower or Agent, each Bank that has not provided the
forms or other documents, as provided above, on the basis of being a "United
States person," shall submit to Borrower and Agent a certificate or other
evidence to the effect that it is such a "United States person."
2.21 EXTENSION OF FACILITY MATURITY DATE.
(a) EXTENSION REQUESTS. Borrower may request a single,
one-year extension of the Facility Maturity Date by submitting a written request
for an extension to Agent (an "Extension Request") no earlier than two hundred
seventy (270) days and no later than one (1) year after the date of this
Agreement. Promptly upon (but not later than five (5) Business Days after)
receipt of the Extension Request, Agent shall notify each Bank of the contents
thereof and shall request each Bank to approve the Extension Request. Approval
of an Extension Request shall be in each Bank's sole discretion, and no Bank
shall have any liability to Borrower or any other Bank if it fails to approve an
Extension Request. Each Bank approving the Extension Request shall deliver its
written approval to Agent no later than sixty (60) days after the date of the
Extension Request. If the approval of each Bank is received by Agent within
sixty (60) days after the date of the Extension Request (or as otherwise
provided in Section 2.21(b)), Agent shall promptly so notify Borrower and each
Bank, and the Facility Maturity Date shall be extended by one (1) year. If any
Bank does not deliver to Agent such Bank's written approval to any Extension
Request within sixty (60) days after the date of such Extension Request, the
Facility Maturity Date shall not be extended, except as otherwise provided in
Section 2.21(b).
(b) FULL ASSIGNMENT BY REJECTING BANKS. If (i) any Bank or
Banks ("Rejecting Bank(s)") in its sole discretion shall not approve an
Extension Request, and (ii) not later than one hundred eighty (180) days after
the date of the Extension Request, all rights and obligations of all Rejecting
Banks under this Agreement and under the other Loan Documents (including,
without limitation, their Commitment and all Loans owing to them) shall have
been assigned in accordance with Section 2.23, to one or more Replacement Banks
who shall have approved in writing such Extension Request at the time of such
assignment, then Agent shall promptly so notify Borrower and each Bank and the
Facility Maturity Date shall be extended by one (1) year.
(c) NO FULL ASSIGNMENT BY REJECTING BANKS. If (i) any
Rejecting Bank shall not approve an Extension Request, and (ii) all Rejecting
Banks have not assigned their rights and obligations under this Agreement to
Replacement Banks in accordance with clause (b)(ii) in this Section 2.21, then
Agent shall promptly so notify Borrower and each Bank (including any Replacement
Bank) and the Facility Maturity Date shall not be extended.
(d) APPROVAL OF EXTENSION. Within ten (10) days after Agent's
notice to Borrower that all Banks (including, if applicable, Replacement Banks)
have approved an Extension Request (whether pursuant to Section 2.21(a) or (b)),
Borrower shall pay to Agent for
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the account of each Bank approving the extension (including, if applicable,
Replacement Banks) an extension fee calculated in the manner set forth in
Section 2.5(c).
(e) NO EXTENSION. Notwithstanding anything in this Section
2.21 to the contrary, if the Extension Request is not approved pursuant to
Section 2.21(a) or (c), or if Borrower does not request an extension pursuant to
this Section 2.21, or if any Unmatured Event of Default or Event of Default
exists at the time of any Extension Request or at any other time, then the
Facility Maturity Date shall not be extended.
(f) REJECTING BANKS BOUND. Each Rejecting Bank shall remain
bound by all of its obligations under this Agreement except to the extent any of
its obligations arising after any assignment to a Replacement Bank are relieved
pursuant to Section 2.23.
2.22 CONVERSION PERIOD.
(a) COMMENCEMENT OF CONVERSION PERIOD. If at any time (i) the
ratio of Consolidated Liabilities to Consolidated Tangible Net Worth equals or
exceeds 3.0:1.0 for any fiscal quarter, or (ii) the ratio of EBITDA to
Consolidated Interest Incurred equals or is less than 1.25:1.0 for any fiscal
quarter, or (iii) if not triggered by clause (i) or (ii) of this Section 2.22
(a), Borrower fails to satisfy any Financial Covenant Test (even if not the same
one) for two (2) consecutive fiscal quarters or three (3) of the trailing five
(5) fiscal quarters (in any such case, the "Triggering Event"), then unless the
Majority Banks in their sole and absolute discretion agree otherwise, the
Conversion Period shall automatically commence. The Conversion Date shall be
first day of the first month after the Triggering Event.
(b) DELIVERY OF COLLATERAL DOCUMENTS AND ENVIRONMENTAL
AGREEMENTS. Within thirty (30) days after the Conversion Date, Borrower shall,
and shall cause the Guarantors to, execute and deliver to Agent all Collateral
Documents and Environmental Agreements relating to the Collateral. All
Collateral Documents shall be in recordable form and sufficient to accomplish
their intended purposes of granting the Banks a properly perfected first and
prior lien on and security interest in the Collateral as security for the
Obligations and the obligations under the Guaranty.
(c) COLLATERAL. The Collateral subject to the properly
perfected first and prior lien on and security interest imposed by the
Collateral Documents shall at all times have an aggregate fair market value, in
the judgment of the Agent, not less than the Borrowing Base required to support
the outstanding Advances and Facility Letter of Credit Obligations. After
delivery to Agent of the Collateral Documents, Borrower shall make payments on
account of the Obligations (in addition to payments otherwise required by this
Agreement) or cause additional Collateral to be subjected to the first and prior
lien and encumbrance of the Collateral Documents as and when Agent in its sole
discretion may require to maintain the minimum Borrowing Base required by this
Agreement.
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(d) DELIVERY OF DUE DILIGENCE DOCUMENTS. Within ninety (90)
days after the Conversion Date, Borrower shall, and shall cause Guarantors to,
provide to Agent all Due Diligence Documents relating to the Collateral. As and
when any additional Collateral is required to be subjected to the first and
prior lien and encumbrance of the Collateral Documents pursuant to Section 2.22
(c), Borrower shall deliver to Agent the Due Diligence documents pertaining to
the additional Collateral.
(e) PARTIAL RELEASES. During the Conversion Period, Agent
shall release any Collateral from the lien and encumbrance of the Collateral
Documents within a reasonable time after request by Borrower or any Guarantor
if:
(i) the Collateral is sold and transferred in the
ordinary course of business to a person that is not an Affiliate;
(ii) at the time of the request and the release, no
Unmatured Event of Default or Event of Default exists;
(iii) at the time of and immediately after the
release, the Borrowing Base is not less than the then outstanding
Advances, plus the outstanding Facility Letter of Credit Obligations
plus the outstanding Aggregate Senior Indebtedness (taking into
account, among other things, any payments by Borrower and the
encumbering of any additional Collateral by the Collateral Documents as
Agent may require pursuant to Section 2.22 (c) to maintain the minimum
Borrowing Base required by this Agreement); and
(iv) the Agent is provided with such plats, surveys,
appraisals, Borrowing Base Certificates, certificates as to the actual
cost of the Collateral, and other documents and information as it may
reasonably require in connection with the release; and
(v) the cost of preparation, review and approval of
the instrument of release, and all other costs and expenses incurred by
Agent in connection with the release, are paid in full by Borrower or
Guarantors.
(f) EFFECT OF CONVERSION PERIOD. If any Triggering Event
described in Section 2.22(a) occurs and no Unmatured Event of Default or Event
of Default has occurred, then the Triggering Event, by itself, shall not
constitute an Unmatured Event of Default or Event of Default under this
Agreement. If, however, (i) the ratio of Consolidated Liabilities to
Consolidated Tangible Net Worth equals or exceeds 3.0:1.0 for two (2)
consecutive fiscal quarters or three (3) of any trailing five (5) fiscal
quarters, or (ii) the ratio of EBITDA to Consolidated Interest Incurred equals
or is less than 1.25:1.0 for two (2) consecutive fiscal
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quarters or three (3) of any trailing five (5) fiscal quarters, or (iii)
Borrower fails to satisfy any Financial Covenant Test (even if not the same one)
for three (3) consecutive fiscal quarters or four (4) of any trailing six (6)
fiscal quarters, then the occurrence of any such event shall constitute an Event
of Default pursuant to Section 10.15.
(g) FINANCIAL REPORTING AND COMPLIANCE. During the Conversion
Period and for so long as the Senior Debt is outstanding (i) in addition to the
other financial reports, documents and information required to be submitted
pursuant to this Agreement, Borrower shall furnish to Agent by the fifteenth
(15th) day of each calendar month a signed certificate certifying the amount of
its Consolidated Tangible Assets (as defined in the Indenture) effective as of
the end of the most recent calendar month then ended and with such current
financial statements, reports and other documents and information as Agent may
reasonably require to verify that the encumbering of the Collateral by the
Collateral Documents does not result in an exceedance of the forty percent (40%)
limitation in clause (i) of the definition of "Permitted Liens" in the
Indenture, and (ii) Borrower shall not, nor will permit any Subsidiary to, cause
or permit any exceedance of the forty percent (40%) limitation.
2.23 REPLACEMENT OF CERTAIN BANKS. In the event a Bank (the "Affected
Bank"):
(i) shall have requested compensation from Borrower
under Sections 3.1 or 3.2 to cover additional costs incurred by such
Bank that are not being incurred generally by the other Banks, or
(ii) shall have delivered a notice pursuant to
Section 3.3 that such Affected Bank is unable to extend LIBOR Loans for
reasons not generally applicable to the other Banks, or
(iii) is a Rejecting Bank pursuant to Section 2.21,
then, in any such case, and at any time after any such event occurs, Borrower
and Agent may make written demand on such Affected Bank for the Affected Bank to
assign all of its rights and obligations under this Agreement (including,
without limitation, its Commitment and all Loans owing to it) in accordance with
this Agreement, and such Affected Bank shall assign, pursuant to one or more
duly executed assignment agreements in substantially the form provided for in
Section 15.3.1, within five (5) Business Days after the date of such demand, to
one or more financial institutions that comply with the provisions of Section
15.3, and that are selected by Borrower and Agent, that are reasonably
acceptable to Agent and Borrower, that Borrower or Agent, as the case may be,
shall have engaged for such purpose (the "Replacement Bank"), all of such
Affected Bank's rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, its Commitment and all Loans owing to
it) in accordance with Section 15.3. If any Affected Bank fails to execute and
deliver such assignment agreements within thirty (30) days after demand, then
such Affected Bank shall have no further right to
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receive any amounts payable under Sections 3.1 and 3.2 with respect to such
Affected Bank.
Agent agrees, upon the occurrence of any such event with respect to an
Affected Bank and upon written request of Borrower, to use its reasonable
efforts to obtain the commitments from one or more financial institutions to act
as a Replacement Bank. Agent is authorized, but shall not be obligated to,
execute one or more of such assignment agreements as attorney-in-fact for any
Affected Bank failing to execute and deliver the same within five (5) Business
Days after the date of such demand. Further, with respect to such assignment,
the Affected Bank shall have concurrently received, in cash, all amounts due and
owing to the Affected Bank hereunder or under any other Loan Document, including
without limitation the aggregate outstanding principal amount of the Loans owed
to such Bank, together with accrued interest thereon through the date of such
assignment, amounts payable under Sections 3.1 and 3.2 with respect to such
Affected Bank (unless forfeited in accordance with the foregoing provisions of
this Section 2.23), and all fees payable to such Affected Bank hereunder;
provided that, upon such Affected Bank's replacement, such Affected Bank shall
cease to be a party hereto but shall continue to be entitled to the benefits of
Article III (unless forfeited in accordance with the foregoing provisions of
this Section 2.23), and Section 12.7, as well as to any fees accrued hereunder
and not yet paid, and shall continue to be obligated under Section 13.8 with
respect to obligations and liabilities accruing prior to the replacement of such
Affected Bank.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1 YIELD PROTECTION. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the compliance
of any Bank therewith,
(i) subjects any Bank or any applicable Lending
Installation to any tax, duty, charge or withholding on or from
payments due from Borrower (excluding any taxes imposed on, or based
on, or determined by reference to the net income of any Bank or
applicable Lending Installation, including, without limitation,
franchise taxes, alternative minimum taxes and any branch profits tax
(collectively, "Excluded Taxes")), any taxes imposed on, or based on,
or determined by reference to or changes the basis of taxation of
payments to any Bank in respect of its Loans or other amounts due it
hereunder (except for Excluded Taxes),
(ii) imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, any Bank or any applicable Lending Installation
(other than reserves and assessments taken into account in determining
the interest rate applicable to LIBOR Rates), or
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(iii) imposes any other condition or requirement the
result of which is to increase the cost to any Bank or any applicable
Lending Installation of making, funding or maintaining loans or reduces
any amount receivable by any Bank or any applicable Lending
Installation in connection with loans, or requires any Bank or any
applicable Lending Installation to make any payment calculated by
reference to the amount of loans held or interest received by it, by an
amount deemed material by such Bank,
then, within fifteen (15) days after demand by such Bank and delivery to
Borrower of documentation or other evidence supporting the Bank's demand,
Borrower shall pay such Bank that portion of such increased expense incurred or
reduction in an amount received which such Bank determines is attributable to
making, funding and maintaining its Loans and its Commitment; provided, however,
that Borrower shall not be required to pay any such increase to any Bank (1) if
such Bank fails to comply with the requirements of Section 2.20 hereof or
forfeits the increase in accordance with Section 2.23 or (2) to the extent that
such Bank determines, in its sole reasonable discretion, that it can, after
notice from Borrower, through reasonable efforts, eliminate or reduce the amount
of tax liabilities payable (without additional costs or expenses unless Borrower
agrees to bear such costs or expenses) or other disadvantages or risks (economic
or otherwise) to such Bank or Agent. If any Bank receives a refund in respect of
any tax for which such Bank has received payment from Borrower hereunder, such
Bank shall promptly notify Borrower of such refund and such Bank shall repay the
amount of such refund to Borrower, provided that Borrower, upon the request of
such Bank, agrees to return such refund (plus any penalties, interest or other
charges) to such Bank in the event such Bank is required to repay such refund.
The determination as to whether any Bank has received a refund shall be made by
such Bank and such determination shall be conclusive absent manifest error.
3.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Bank or Issuing Bank
determines the amount of capital required or expected to be maintained by such
Bank, any Lending Installation of such Bank or Issuing Bank or any corporation
controlling such Bank or Issuing Bank is increased as a result of a Change,
then, within fifteen (15) days after demand by such Bank or Issuing Bank, and
delivery to Borrower of documentation or other evidence supporting the Bank's
demand, Borrower shall pay such Bank or Issuing Bank the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Bank or Issuing Bank determines is attributable to
this Agreement, its Loans or its obligation to make Loans hereunder, or its
issuance or maintenance of or participation in, or commitment to issue, to
maintain or to participate in, the Facility Letters of Credit hereunder (after
taking into account such Bank's or Issuing Bank's policies as to capital
adequacy); provided, however, that Borrower shall not be required to pay any
such increase to any Bank if such Bank forfeits the increase in accordance with
Section 2.23. "Change" means (i) any change after the date of this Agreement in
the Risk-Based Capital Guidelines or (ii) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this
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Agreement which affects the amount of capital required or expected to be
maintained by any Bank, Issuing Bank, Lending Installation or any corporation
controlling any Bank or Issuing Bank. "Risk-Based Capital Guidelines" means (A)
the risk-based capital guidelines in effect in the United States on the date of
this Agreement, including transition rules, and (B) the corresponding capital
regulations promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking Regulation
and Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.
3.3 AVAILABILITY OF TYPES OF ADVANCES. If any Bank determines and
notifies Agent that maintenance of any of such Bank's LIBOR Loans at a suitable
Lending Installation would violate any applicable law, rule, regulation or
directive, whether or not having the force of law, Agent shall suspend the
availability of the affected Type of Advance and require any LIBOR Advances of
the affected Type to be repaid; or if the Majority Banks determine and notify
Agent that (i) deposits of a type or maturity appropriate to match fund LIBOR
Advances are not available, Agent shall suspend the availability of the affected
Type of Advance with respect to any LIBOR Advances made after the date of any
such determination, or (ii) an interest rate applicable to a Type of Advance
does not accurately reflect the cost of making a LIBOR Advance of such Type,
then, if for any reason whatsoever the provisions of Section 3.1 are
inapplicable, Agent shall suspend the availability of the affected Type of
Advance with respect to any LIBOR Advance made after the date of any such
determination.
3.4 FUNDING INDEMNIFICATION. If any payment of a LIBOR Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a LIBOR Advance is not made
on the date specified by Borrower for any reason other than default by Banks,
Borrower will indemnify each Bank for any loss or cost or expense incurred by it
resulting therefrom, including, without limitation, any loss or cost of
re-employment of funds at a lower rate of interest or in liquidating or
employing deposits required to fund or maintain the LIBOR Advance.
3.5 BANK STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably
possible, each Bank shall designate an alternate Lending Installation with
respect to its LIBOR Advances to reduce any liability of Borrower to such Bank
under Sections 3.1 and 3.2 or to avoid the unavailability of a Type of Advance
under Section 3.3, so long as such designation is not disadvantageous to such
Bank. Each Bank or Issuing Bank shall deliver a written statement of such Bank
or Issuing Bank as to the amount due, if any, under Sections 3.1, 3.2 or 3.4.
Such written statement shall set forth in reasonable detail the calculations
upon which such Bank or Issuing Bank determined such amount and shall be final,
conclusive and binding on Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a LIBOR
Advance shall be calculated as though each Bank funded its LIBOR Advance through
the purchase of a deposit of the type and maturity corresponding to the deposit
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used as a reference in determining the LIBOR Advance applicable to such Loan,
whether in fact that is the case or not. Unless otherwise provided herein, the
amount specified in the written statement shall be payable within three (3) days
after receipt by Borrower of the written statement. The obligations of Borrower
under Sections 3.1, 3.2 and 3.4 shall survive payment of the Obligations and
termination of this Agreement.
ARTICLE IV
THE LETTER OF CREDIT FACILITY
4.1 FACILITY LETTERS OF CREDIT. The Issuing Bank agrees, on the terms
and conditions set forth in this Agreement, to issue from time to time for the
account of Borrower, through such offices or branches as it and Borrower may
jointly agree, one or more Facility Letters of Credit in accordance with this
Article IV, during the period commencing on the date hereof and ending on the
Business Day prior to the Facility Maturity Date. Each Facility Letter of Credit
shall be either (i) a standby letter of credit to support obligations of
Borrower or a Guarantor, contingent or otherwise, arising in the ordinary course
of business, or (ii) a documentary letter of credit in respect of the purchase
of goods or services by Borrower or a Guarantor in the ordinary course of
business.
4.2 LIMITATIONS. No Issuing Bank shall issue, amend or extend, at any
time, any Facility Letter of Credit:
(i) if the aggregate maximum amount then available
for drawing under Letters of Credit issued by such Issuing Bank, after
giving effect to the Facility Letter of Credit or amendment or
extension thereof requested hereunder, shall exceed any limit imposed
by law or regulation upon such Issuing Bank;
(ii) if, after giving effect to the Facility Letter
of Credit or amendment or extension thereof requested hereunder, the
aggregate principal amount of the Facility Letter of Credit Obligations
would exceed $10,000,000.00;
(iii) that, in the case of the issuance of a Facility
Letter of Credit, is in, or in the case of an amendment of a Facility
Letter of Credit, increases the face amount thereof by, an amount in
excess of the then Aggregate Available Credit;
(iv) if, after giving effect to the Facility Letter
of Credit or amendment or extension thereof requested hereunder, the
aggregate principal amount of the Facility Letter of Credit Obligations
outstanding plus the principal amount of all Advances outstanding plus
the Aggregate Senior Indebtedness outstanding would exceed the
Borrowing Base as of the most recent Inventory Valuation Date;
(v) if such Issuing Bank receives written notice from
Agent at or before noon, West Palm Beach, Florida time, on the proposed
Issuance Date of such
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Facility Letter of Credit that one or more of the conditions precedent
contained in Sections 5.1 or 5.2, as applicable, would not on such
Issuance Date be satisfied, unless such conditions are thereafter
satisfied and written notice of such satisfaction is given to such
Issuing Bank by Agent;
(vi) that has an expiration date (taking into account
any automatic renewal provisions thereof) that is later than the
Issuing Bank may agree; provided, however in no event shall the
expiration date be later than the Business Day next preceding the
scheduled Facility Maturity Date; or
(vii) that is in a currency other than Dollars, or
that is not consistent with the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be updated.
4.3 CONDITIONS. In addition to being subject to the satisfaction of the
conditions contained in Sections 5.1 and 5.2, as applicable, the issuance of any
Facility Letter of Credit is subject to the satisfaction in full of the
following conditions:
(i) Borrower shall have delivered to the Issuing Bank
at such times and in such manner as the Issuing Bank may reasonably
prescribe a Reimbursement Agreement and such other documents and
materials as may be reasonably required pursuant to the terms thereof,
and the proposed Facility Letter of Credit shall be reasonably
satisfactory to such Issuing Bank in form and content; and
(ii) as of the Issuance Date no order, judgment or
decree of any court, arbitrator or governmental authority shall enjoin
or restrain such Issuing Bank from issuing the Facility Letter of
Credit and no law, rule or regulation applicable to such Issuing Bank
and no directive from any governmental authority with jurisdiction over
the Issuing Bank shall prohibit such Issuing Bank from issuing Letters
of Credit generally or from issuing that Facility Letter or Credit.
4.4 PROCEDURE FOR ISSUANCE OF FACILITY LETTERS OF CREDIT.
(a) REQUEST FOR FACILITY LETTER OF CREDIT. Borrower shall give
the Issuing Bank and Agent not less than five (5) Business Days' prior written
notice of any requested issuance of a Facility Letter of Credit under this
Agreement. Such notice shall specify (i) the stated amount of the Facility
Letter of Credit requested, (ii) the requested Issuance Date, which shall be a
Business Day, (iii) the date on which such requested Facility Letter of Credit
is to expire, which date shall be in compliance with the requirements of Section
4.2(vi), (iv) the purpose for which such Facility Letter of Credit is to be
issued (which shall be a purpose permitted pursuant to Section 7.2), and (v) the
Person for whose benefit the requested Facility Letter of Credit is to be
issued. At the time such request is made, Borrower shall also provide
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Agent and the Issuing Bank with a copy of the form of the Facility Letter of
Credit it is requesting be issued.
(b) ISSUING BANK. Within two (2) Business Days after receipt
of a request for issuance of a Facility Letter of Credit in accordance with
Section 4.4(a), the Issuing Bank shall approve or disapprove, in its reasonable
discretion, the form of such requested Facility Letter of Credit, but the
issuance of such approved Facility Letter of Credit shall continue to be subject
to the provisions of this Article IV. The Issuing Bank shall use reasonable
efforts to notify Borrower of any changes in the Issuing Bank's policies or
procedures that could reasonably be expected to affect adversely the Issuing
Bank's approval of the form of any requested Facility Letters of Credit.
(c) CONFIRMATION OF ISSUANCE. Upon receipt of a request for
issuance of a Facility Letter of Credit in accordance with Section 4.4(a), Agent
shall determine, as of the close of business on the day it receives such
request, whether the issuance of such Facility Letter of Credit would be
permitted under the provisions of Sections 4.2(ii), (iii), (iv) and (v) and,
prior to the close of business on the second Business Day after Agent received
such request, Agent shall notify the Issuing Bank and Borrower (in writing or by
telephonic notice confirmed promptly thereafter in writing) whether issuance of
the requested Facility Letter of Credit would be permitted under the provisions
of Sections 4.2(ii), (iii), (iv) and (v). If Agent notifies the Issuing Bank and
Borrower that such issuance would be so permitted, then, subject to the terms
and conditions of this Article IV and provided that the applicable conditions
set forth in Sections 5.1 and 5.2 have been satisfied, the Issuing Bank shall,
on the requested Issuance Date, issue the requested Facility Letter of Credit in
accordance with the Issuing Bank's usual and customary business practices. The
Issuing Bank shall give Agent written notice, or telephonic notice confirmed
promptly thereafter in writing, of the issuance of a Facility Letter of Credit.
(d) EXTENSION AND AMENDMENT. An Issuing Bank shall not extend
or amend any Facility Letter of Credit unless the requirements of this Section
4.4 are met as though a new Facility Letter of Credit were being requested and
issued; provided, however, that if the Facility Letter of Credit, as originally
issued, sets forth such extension or amendment, then the Issuing Bank shall so
extend or amend the Facility Letter of Credit upon the request of Borrower given
in the manner set forth in Section 4.4(a) and upon satisfaction of the terms and
conditions of Section 4.4(c).
(e) EXISTING LETTERS OF CREDIT. As of the date of this
Agreement, certain of the Banks have previously issued, and there are currently
outstanding, Letters of Credit for the benefit of Borrower and/or a Guarantor
(the "Existing Letters of Credit"), all pursuant to the Refinanced Loans. All
Existing Letters of Credit are listed in SCHEDULE "4.4" attached hereto. Such
Existing Letters of Credit shall remain outstanding after the date of this
Agreement. Borrower and/or the applicable Guarantor remain obligated with
respect to the Existing Letters of Credit on an unsecured or cash secured basis.
Subject to the limitations and procedures of this
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Article IV, all Existing Letters of Credit shall be converted to Facility
Letters of Credit no later than their next renewal, replacement or reissue date.
The date of such conversion shall be deemed to be the date of issuance of such
Facility Letter of Credit for purposes of this Agreement, including without
limitation, for purposes of calculating the fees payable under Section 4.7.
Immediately upon such conversion, the Issuing Bank, through Agent, shall be
deemed to have sold and transferred, and each Bank shall be deemed to have
irrevocably and unconditionally purchased and received from Agent, without
recourse or warranty, in each case without further action on the part of any
Person, an undivided interest and participation, (ratably in proportion to the
ratio that such Bank's Commitment bears to the Aggregate Commitment) in such
Facility Letter of Credit. Each Bank severally agrees to fund any disbursements
by the Issuing Bank pursuant to Existing Letters of Credit by funding in
accordance with Section 4.6. The Existing Letters of Credit converted to
Facility Letters of Credit pursuant to this Section 4.4(e) shall be deemed to be
Facility Letters of Credit for all purposes under this Agreement, and shall be
subject to all terms and conditions hereof.
4.5 DUTIES OF ISSUING BANK. Any action taken or omitted to be taken by
an Issuing Bank under or in connection with any Facility Letter of Credit, if
taken or omitted in the absence of willful misconduct or gross negligence, shall
not put such Issuing Bank under any resulting liability to any Bank or, assuming
that such Issuing Bank has complied with the procedures specified in Section
4.4, relieve any Bank of its obligations hereunder to such Issuing Bank. In
determining whether to pay under any Facility Letter of Credit, the Issuing Bank
shall have no obligation relative to Banks other than to confirm that any
documents required to be delivered under such Facility Letter of Credit appear
to have been delivered in compliance and that they appear to comply on their
face with the requirements of such Facility Letter of Credit.
4.6 PARTICIPATION.
(a) PROPORTIONATE SHARE OF BANKS. Immediately upon issuance by
an Issuing Bank of any Facility Letter of Credit in accordance with Section 4.4,
each Bank shall be deemed to have irrevocably and unconditionally purchased and
received from such Issuing Bank, without recourse or warranty, an undivided
interest and participation (ratably in proportion to the ratio that such Bank's
Commitment bears to the Aggregate Commitment) in such Facility Letter of Credit.
(b) PAYMENT BY ISSUING BANK. In the event that an Issuing Bank
makes any payment under any Facility Letter of Credit and Borrower shall not
have repaid such amount to such Issuing Bank on or before the date of such
payment by such Issuing Bank, such Issuing Bank shall promptly so notify Agent,
which shall promptly so notify each Bank. Upon receipt of such notice, each Bank
shall promptly and unconditionally pay to Agent for the account of such Issuing
Bank the amount of such Bank's share (ratably in proportion to the ratio that
such
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Bank's Commitment bears to the Aggregate Commitment) of such payment in same day
funds, and Agent shall promptly pay such amount, and any other amounts received
by Agent for such Issuing Bank's account pursuant to this Section 4.6(b), to
such Issuing Bank. If Agent so notifies such Bank prior to 11:00 a.m., West Palm
Beach, Florida time, on any Business Day, such Bank shall make available to
Agent for the account of such Issuing Bank such Bank's share of the amount of
such payment on such Business Day in same day funds. If and to the extent such
Bank shall not have so made its share of the amount of such payment available to
Agent for the account of such Issuing Bank, such Bank agrees to pay to Agent for
the account of such Issuing Bank forthwith on demand such amount, together with
interest thereon, for each day from the date such payment was first due until
the date such amount is paid to Agent for the account of such Issuing Bank, at
the Federal Funds Effective Rate. The failure of any Bank to make available to
Agent for the account of such Issuing Bank such Bank's share of any such payment
shall not relieve any other Bank of its obligation hereunder to make available
to Agent for the account of such Issuing Bank its share of any payment on the
date such payment is to be made.
(c) ADVANCES. The payments made by Banks to an Issuing Bank in
reimbursement of amounts paid by it under a Facility Letter of Credit shall
constitute, and Borrower hereby expressly acknowledges and agrees that such
payments shall constitute, Advances hereunder to Borrower and such payments
shall for all purposes be treated as Advances to Borrower (notwithstanding that
the amounts thereof may not comply with the provisions of Section 2.6). Such
Advances shall be Floating Rate Advances, subject to Borrower's rights to
convert the Advance to another Type in accordance with Article II hereof.
(d) COPIES OF DOCUMENTS. Upon the request of Agent or any
Bank, an Issuing Bank shall furnish to the requesting Agent or Bank copies of
any Facility Letter of Credit or Reimbursement Agreement to which such Issuing
Bank is party and such other documentation as may reasonably be requested by
Agent or the Bank.
(e) OBLIGATIONS OF BANKS. The obligations of Banks to make
payments to Agent for the account of an Issuing Bank with respect to a Facility
Letter of Credit shall be irrevocable, not subject to any qualification or
exception whatsoever and shall be made in accordance with, but not subject to,
the terms and conditions of this Agreement under all circumstances
notwithstanding:
(i) any lack of validity or enforceability of this
Agreement, any Facility Letter of Credit (except where due to the gross
negligence or willful misconduct of the Issuing Bank), or any of the
other Loan Documents;
(ii) the existence of any claim, setoff, defense or
other right which Borrower or any Guarantor may have at any time
against a beneficiary named in a Facility Letter of Credit or any
transferee of any Facility Letter of Credit (or any Person for whom any
such transferee may be acting), such Issuing Bank, Agent, any Bank, or
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any other Person, whether in connection with this Agreement, any
Facility Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions between
Borrower or any Subsidiary and the beneficiary named in any Facility
Letter of Credit) other than the defense of payment in accordance with
this Agreement or a defense based on the gross negligence or willful
misconduct of the Issuing Bank;
(iii) any draft, certificate or any other document
presented under the Facility Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect of any statement
therein being untrue or inaccurate in any respect so long as the
payment by the Issuing Bank under such Facility Letter of Credit
against presentation of such draft, certificate or other document shall
not have constituted gross negligence or willful misconduct;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of any of the Loan
Documents;
(v) any failure by Agent or the Issuing Bank to make
any reports required pursuant to Section 4.8; or
(vi) the occurrence of any Event of Default or
Unmatured Event of Default.
4.7 COMPENSATION FOR FACILITY LETTERS OF CREDIT
(a) PAYMENT OF FACILITY LETTER OF CREDIT FEE. Borrower agrees
to pay to Agent, in the case of each outstanding Facility Letter of Credit, the
Facility Letter of Credit Fee therefor. The Facility Letter of Credit Fee shall
be payable annually and in advance, on the Issuance Date and annually thereafter
for so long as the Facility Letter of Credit is outstanding. All Facility Letter
of Credit Fees shall be non-refundable in any event and shall not be calculated
on a pro rata basis for the period to which such payment applies. Agent shall
promptly remit such Facility Letter of Credit Fees, when paid, to Banks (ratably
in the proportion that each Bank's Commitment bears to the Aggregate
Commitment).
(b) ADMINISTRATIVE FEE. In addition to the Facility Letter of
Credit Fee payable on each outstanding Facility Letter of Credit in accordance
with Section 4.7(a), Borrower shall pay to the Issuing Bank on the Issuance Date
an administrative fee in the amount of $250.00 for each Facility Letter of
Credit issued.
(c) AMOUNTS OWED TO ISSUING BANK. An Issuing Bank shall have
the right to receive solely for its own account such amounts as Borrower may
agree, in writing, to pay to such Issuing Bank with respect to issuance fees and
for such Issuing Bank's out-of-pocket costs
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of issuing and servicing Facility Letters of Credit.
4.8 ISSUING BANK REPORTING REQUIREMENTS. Each Issuing Bank shall, no
later than the tenth day following the last day of each month, provide to Agent
a schedule of the Facility Letters of Credit issued by it, in form and substance
reasonably satisfactory to Agent, showing the Issuance Date, account party,
original face amount, amount (if any) paid thereunder, expiration date and the
reference number of each Facility Letter of Credit outstanding at any time
during such month and the aggregate amount (if any) payable by Borrower to such
Issuing Bank during the month pursuant to Section 3.2. Copies of such reports
shall be provided promptly to each Bank and Borrower by Agent.
4.9 INDEMNIFICATION; NATURE OF ISSUING BANK'S DUTIES.
(a) INDEMNITY. In addition to amounts payable as elsewhere
provided in this Article IV, Borrower hereby agrees to protect, indemnify, pay
and hold harmless Agent and each Bank and Issuing Bank from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) arising from the claims of third parties
against Agent, Issuing Bank or Bank as a consequence, direct or indirect, of (i)
the issuance of any Facility Letter of Credit other than, in the case of an
Issuing Bank, as a result of its willful misconduct or gross negligence, or (ii)
the failure of an Issuing Bank issuing a Facility Letter of Credit to honor a
drawing under such Facility Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority.
(b) ASSUMPTION OF RISK. As among Borrower, Banks, Agent and
the Issuing Bank, Borrower assumes all risks of the acts and omissions of, or
misuse of Facility Letters of Credit by, the respective beneficiaries of such
Facility Letters of Credit. In furtherance and not in limitation of the
foregoing, neither the Issuing Bank nor Agent nor any Bank shall be responsible:
(i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of the Facility
Letters of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign a Facility Letter of Credit or the rights or benefits thereunder
or proceeds thereof, in whole or in part, which may prove to be invalid
or ineffective for any reason;
(iii) for failure of the beneficiary of a Facility
Letter of Credit to
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comply fully with conditions required in order to draw upon such
Facility Letter of Credit;
(iv) for errors, omissions, interruptions or delays
in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher;
(v) for errors in interpretation of technical terms;
(vi) for any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Facility Letter of Credit or of the proceeds thereof;
(vii) for the misapplication by the beneficiary of a
Facility Letter of Credit of the proceeds of any drawing under such
Facility Letter of Credit; and
(viii) for any consequences arising from causes
beyond the control of Agent, the Issuing Bank and Banks including,
without limitation, any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto government or governmental
authority. None of the above shall affect, impair, or prevent the
vesting of any of the Issuing Bank's rights or powers under this
Section 4.9.
(c) GOOD FAITH. In furtherance and extension and not in
limitation of the specific provisions hereinabove set forth, any action taken or
omitted by an Issuing Bank under or in connection with the Facility Letters of
Credit or any related certificates, if taken or omitted in good faith under
commercially reasonable standards, shall not put such Issuing Bank, Agent or any
Bank under any resulting liability to Borrower or relieve Borrower of any of its
obligations hereunder to any such Person.
(d) CERTAIN ACTS OF ISSUING BANK. Notwithstanding anything to
the contrary contained in this Section 4.9, Borrower shall have no obligation to
indemnify an Issuing Bank under this Section 4.9 in respect of any liability
incurred by such Issuing Bank arising primarily out of the willful misconduct or
gross negligence of such Issuing Bank, as determined by a court of competent
jurisdiction, or out of the wrongful dishonor by such Issuing Bank of a proper
demand for payment made under the Facility Letters of Credit issued by such
Issuing Bank, unless such dishonor was made at the request of Borrower.
4.10 NO OBLIGATION TO ISSUE. The Issuing Bank shall not at any time be
obligated to issue any Facility Letter of Credit if such issuance would conflict
with, or cause the Issuing Bank or any other Bank, to exceed any limits imposed
by any applicable law, rule or regulation.
4.11 OBLIGATIONS OF ISSUING BANK AND OTHER BANKS. Except to the extent
that a
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Bank shall have agreed to be designated as an Issuing Bank, no Bank shall have
any obligation to accept or approve any request for, or to issue, amend or
extend, any Letter of Credit, and the obligations of the Issuing Bank to issue,
amend or extend any Facility Letter of Credit are expressly limited by and
subject to the provisions of this Article IV.
ARTICLE V
CONDITIONS PRECEDENT
5.1 INITIAL ADVANCE. Banks shall not be required to make the initial
Advance hereunder, and the Issuing Bank shall not be required to issue the
initial Facility Letter of Credit hereunder, unless Borrower has paid to Agent
the fees set forth in the commitment letter (including the letter agreement
incorporated therein) dated March 9, 1998 between Agent, SunTrust Equitable
Securities Corporation, and Borrower (signed and accepted by Borrower on March
11, 1998), and any other amounts then due pursuant to this Agreement, and
Borrower has furnished to Agent with the following in form and substance
acceptable to Agent:
(i) Copies of the certificate of incorporation of
Borrower and each Guarantor, together with all amendments, and a
certificate of good standing, all certified by the appropriate
governmental officer in the jurisdiction of incorporation.
(ii) Copies, certified by the Secretary or Assistant
Secretary of Borrower and each Guarantor, of each such corporation's
by-laws and of its Board of Directors' resolutions (and resolutions of
other bodies, if any are deemed necessary by counsel for any Bank)
authorizing the execution of the Loan Documents and the Guaranty.
(iii) Incumbency certificates, executed by the
Secretary or Assistant Secretary of Borrower and each Guarantor, which
shall identify by name and title and bear the signature of the officers
of the such corporation authorized to sign the Loan Documents and the
Guaranty (as applicable) and (if applicable) to make borrowings
hereunder and to request, apply for and execute Facility Letter of
Credit Reimbursement Agreements with respect to Facility Letters of
Credit hereunder, upon which certificates Agent, Banks and the Issuing
Bank shall be entitled to rely until informed of any change in writing
by Borrower or the applicable Guarantor.
(iv) A written opinion of Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel, P.A., counsel to Borrower and
Guarantors, addressed to Agent and Banks in substantially the form of
EXHIBIT "F" hereto.
(v) A written opinion of general counsel of Borrower,
addressed to Agent and Banks in substantially the form of EXHIBIT "G"
hereto.
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(vi) Notes payable to the order of each of Banks.
(vii) Written money transfer instructions, in form
acceptable to Agent, addressed to Agent and signed by an Authorized
Officer, together with such other related money transfer authorizations
as Agent may have reasonably requested.
(viii) The Guaranty duly executed by Guarantors.
(ix) Evidence satisfactory to Agent (A) of payment in
full (which payment may be made from the proceeds of the initial
Advance hereunder) of all obligations of Borrower and Guarantors with
respect to, and termination of the financing arrangements evidenced by,
the Refinanced Loans, and (B) that all Liens securing the obligations
and financing arrangements related to the Refinanced Loans shall be
discharged promptly, but in no event later than sixty (60) days,
following the payment of such obligations.
(x) Evidence of insurance required pursuant to
Section 7.6.
(xi) Such other documents as any Bank or Issuing Bank
or their respective counsel may have reasonably requested.
5.2 EACH ADVANCE. Banks shall not be required to make any Advance
(other than the conversion of an Advance of one Type to an Advance of another
Type that does not increase the aggregate amount of outstanding Advances), and
the Issuing Bank shall not be required to issue, amend or extend a Facility
Letter of Credit, unless on the applicable Borrowing Date or Issuance Date:
(i) There exists no Event of Default or Unmatured
Event of Default.
(ii) The representations and warranties contained in
Article VI are true and correct in all material respects as of such
Borrowing Date or Issuance Date.
(iii) After the making of such Advance or issuance of
such Facility Letter of Credit and giving effect thereto, (A) the
principal amount of all Advances outstanding plus the aggregate amount
of the Facility Letter of Credit Obligations outstanding shall not
exceed the Aggregate Commitment, (B) the aggregate principal amount of
all Advances outstanding plus the aggregate amount of the Facility
Letter of Credit Obligations outstanding plus the Aggregate Senior
Indebtedness outstanding shall not exceed the Borrowing Base
(determined as of the most recent Inventory Valuation Date).
(iv) Borrower shall have delivered to Agent, within
the time period
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specified in Section 2.8, a duly completed Borrowing Notice.
(v) All legal matters incident to (A) the making of
such Advance shall be reasonably satisfactory to Agent and its counsel
and (B) the issuance of such Facility Letter of Credit shall be
reasonably satisfactory to Agent, such Issuing Bank and their
respective counsel.
Each Borrowing Notice with respect to each such Advance and each
request for a Facility Letter of Credit shall constitute a representation and
warranty by Borrower that the conditions contained in Sections 5.2(i) and (ii)
have been satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Banks and Agent that:
6.1 EXISTENCE AND STANDING. Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Borrower also has all requisite authority to
conduct its business in each jurisdiction in which its business is conducted
(except where the failure to maintain such authority would not reasonably be
expected to have and does not have a Material Adverse Effect). Each Guarantor is
a corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation. Each Guarantor also has all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted (except where the failure to maintain such authority would not
reasonably be expected to have and does not have a Material Adverse Effect).
6.2 AUTHORIZATION AND VALIDITY. Borrower has the corporate power and
authority to execute and deliver the Loan Documents and to perform its
obligations hereunder and thereunder. The execution and delivery by Borrower of
the Loan Documents and the performance of its obligations thereunder have been
duly authorized and the Loan Documents constitute legal, valid and binding
obligations of Borrower enforceable against Borrower in accordance with their
terms, subject to bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and general principles of equity.
Guarantors have the corporate power and authority to execute and deliver the
Guaranty and the Loan Documents and to perform its obligations thereunder. The
execution and delivery by Guarantors of the Guaranty and the Loan Documents and
the performance of its obligations thereunder have been duly authorized, and the
Guaranty and the Loan Documents constitute the legal, valid and binding
obligations of Guarantors enforceable against Guarantors in accordance with
their terms, subject to bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and general principles of equity.
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6.3 NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and delivery
by Borrower of the Loan Documents or by each Guarantor of the Guaranty and the
Loan Documents, nor the consummation of the transactions herein contemplated,
nor compliance with the provisions hereof or thereof will violate in any
material respect any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on Borrower or any Guarantor or Borrower's or any
Guarantor's certificate of incorporation or bylaws or the provisions of any
indenture (including without limitation the Indenture), instrument or agreement
to which Borrower or any Guarantor is a party or is subject, or by which it, or
its Property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the Property of
Borrower or any Guarantor pursuant to the terms of any such indenture,
instrument or agreement. Except as set forth on SCHEDULE "6.3" hereto, no order,
consent, approval, license, authorization, or validation of, or filing,
recording or registration with, or exemption by, any governmental or public body
or authority, or any subdivision thereof, is required to authorize, or is
required in connection with the execution, delivery and performance of, or the
legality, validity, binding effect or enforceability of, any of the Loan
Documents or the Guaranty.
6.4 FINANCIAL STATEMENTS AND CONDITION. The October 31, 1997 audited
consolidated financial statements of Borrower and its Subsidiaries and the
January 31, 1998 unaudited financial statements of Borrower and its Subsidiaries
delivered to Banks were prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Such statements fairly present, in all
material respects, the consolidated financial condition and operations of
Borrower and its Subsidiaries at such date and the consolidated results of their
operations for the period then ended. Neither the Borrower nor any Guarantor has
any Indebtedness except as listed in SCHEDULE 6.4 hereto.
6.5 MATERIAL ADVERSE CHANGE. Since the dates of the specific financial
statements (whether quarterly or annual) described in Section 6.4, there has
been no change in the business, Property, condition (financial or otherwise) or
results of operations of Borrower and Guarantors (taken as a whole) that has had
or would reasonably be expected to have a Material Adverse Effect.
6.6 TAXES. Borrower and each Guarantor have filed all United States
federal income tax returns and all other material tax returns which are required
to be filed and have paid all taxes due pursuant to said returns or pursuant to
any assessment received by Borrower or any Guarantor, except such taxes, if any,
as are being contested in good faith and as to which adequate reserves have been
provided. No tax Liens (except Permitted Liens) have been filed and no claims
are being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of Borrower and each Guarantor in respect of any taxes or
other governmental charges are adequate in accordance with GAAP.
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6.7 LITIGATION AND CONTINGENT OBLIGATIONS. Except as set forth in
SCHEDULE "6.7" attached hereto, there is no litigation, arbitration,
governmental investigation, proceeding or inquiry pending or, to the knowledge
of any Authorized Officer, threatened against or affecting Borrower or any
Subsidiary. None of the foregoing has had or would reasonably be expected to
have a Material Adverse Effect. Borrower and each Guarantor have no material
contingent obligations (not provided for or disclosed in the specific financial
statements described in Section 6.4) that has had or would reasonably be
expected to have a Material Adverse Effect. For purposes of this Section 6.7
only, any litigation, suits or proceedings not covered by insurance where the
sole potential liability is money damages and where in the aggregate (taking all
litigation, suits and proceedings into account) the amounts claimed or in
controversy are less than $1,500,000.00 shall not, by itself, be deemed material
or to have a Material Adverse Effect.
6.8 SUBSIDIARIES. All existing Subsidiaries of Borrower and each
Guarantor are Wholly-Owned Subsidiaries, and their respective jurisdictions of
incorporation or formation, and the percentage of their respective capital stock
or interest owned by Borrower or any Guarantor or their Subsidiaries are listed
in SCHEDULE 6.8 hereto. All of the issued and outstanding shares of capital
stock of Borrower and each Guarantor have been duly authorized and validly
issued and are fully paid and non-assessable.
6.9 ERISA. There are no Unfunded Liabilities under any Single Employer
Plans and there are no withdrawal liabilities under any Multiemployer Plans of
the Borrower, any Guarantor and any other member of the Controlled Group. Each
Plan complies in all material respects with all applicable requirements of law
and regulations, no Reportable Event has occurred with respect to any Plan,
neither Borrower, nor any Guarantor nor any other member of the Controlled Group
has withdrawn from any Multiemployer Plan or initiated steps to do so, and no
steps have been taken to terminate any Plan.
6.10 ACCURACY OF INFORMATION. All factual information heretofore or
contemporaneously furnished in writing by or on behalf of Borrower or any
Guarantor to Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such factual
information hereafter furnished in writing by or on behalf of Borrower or any
Guarantor to Agent or any Bank will be, true and accurate (taken as a whole), in
all material respects, on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such time.
6.11 REGULATIONS G, U AND X. Neither Borrower, nor any Guarantor nor
any Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock (as defined in Regulation G, Regulation U or Regulation X).
6.12 MATERIAL AGREEMENTS. Neither Borrower nor any Guarantor is in
default in the
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performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any agreement or instrument to which it is a party
or by which it or its assets may be bound, (ii) the Indenture, or the Old
Indenture, or (iii) any agreement or instrument evidencing or governing any
other Indebtedness, which default (as to clauses (i) and (iii) only) has had or
would reasonably be expected to have a Material Adverse Effect.
6.13 LABOR DISPUTES AND ACTS OF GOD. Neither the business nor the
Property of Borrower or of any Guarantor is affected by any fire, explosion,
accident, strike, lockout, or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance), which has had or would reasonably be
expected to have a Material Adverse Effect.
6.14 OWNERSHIP. Borrower and each Guarantor have good and marketable
title to, or valid leasehold interests in, all of their respective properties
and assets, real and personal, including the properties and assets and leasehold
interests reflected in the specific financial statements referred to in Section
6.4, free and clear of all Liens other than Permitted Liens (except to the
extent that (i) such properties or assets have been disposed of in the ordinary
course of business or (ii) the failure to have such title has not had and would
not reasonably be expected to have a Material Adverse Effect).
6.15 OPERATION OF BUSINESS. Borrower and each Guarantor possess all
licenses, permits, franchises, patents, copyrights, trademarks, and trade names,
or rights thereto, to conduct their respective businesses substantially as now
conducted, and as presently proposed to be conducted, with such exceptions as
have not had and would not reasonably be expected to have a Material Adverse
Effect.
6.16 LAWS; ENVIRONMENT. Borrower and each Guarantor have duly complied,
and their businesses, operations and Property are in compliance, in all material
respects, with the provisions of all federal, state, and local statutes, laws,
codes, and ordinances and all rules and regulations promulgated thereunder
(including without limitation those relating to the environment, health and
safety). Borrower and each Guarantor have been issued all required federal,
state, and local permits, licenses, certificates, and approvals relating to (1)
air emissions; (2) discharges to surface water or groundwater; (3) solid or
liquid waste disposal; (4) the use, generation, storage, transportation, or
disposal of toxic or hazardous substances or hazardous wastes (intended hereby
and hereafter to include any and all such materials listed in any federal,
state, or local law, code, or ordinance and all rules and regulations
promulgated thereunder as hazardous); or (5) other environmental, health or
safety matters. Except in accordance with a valid governmental permit, license,
certificate or approval, to the best knowledge of Borrower, there has been no
material emission, spill, release, or discharge into or upon (1) the air; (2)
soils, or any improvements located thereon; (3) surface water or groundwater; or
(4) the sewer, septic system or waste treatment, storage or disposal system
servicing any Property of Borrower or a Guarantor, of any toxic or hazardous
substances or hazardous wastes at or from such Property.
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Neither Borrower nor any Guarantor has received notice of any written complaint,
order, directive, claim, citation, or notice from any governmental authority or
any person or entity with respect to violations of law or damage by reason of
Borrower's or any Guarantor's (1) air emissions; (2) spills, releases, or
discharges to soils or improvements located thereon, surface water, groundwater
or the sewer, septic system or waste treatment, storage or disposal systems
servicing any Property; (3) solid or liquid waste disposal; (4) use, generation,
storage, transportation, or disposal of toxic or hazardous substances or
hazardous waste; or (5) other environmental, health or safety matters affecting
Borrower or any Guarantor or its business, operation or Property. Neither
Borrower nor any Guarantor has any material Indebtedness, obligation, or
liability, absolute or contingent, matured or not matured, with respect to the
storage, treatment, cleanup, or disposal of any solid wastes, hazardous wastes,
or other toxic or hazardous substances (including without limitation any such
indebtedness, obligation, or liability with respect to any current regulation,
law or statute regarding such storage, treatment, cleanup, or disposal).
6.17 INVESTMENT COMPANY ACT. Neither Borrower nor any Guarantor is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
6.18 PUBLIC UTILITY HOLDING COMPANY ACT AND SIMILAR ACTS. Neither
Borrower nor any Guarantor nor any Subsidiary is a "holding company" or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended or is subject to
any regulation under any other law which regulates the incurrence of
Indebtedness.
6.19 INDENTURE PROVISIONS. Each Guarantor is a Wholly-Owned Restricted
Subsidiary, as that term is defined in the Indenture. Each Guarantor hereunder
is a Guarantor, as that term is defined in the Indenture. The Commitments
constitute a Bank Facility, as that term is defined in the Indenture.
6.20 YEAR 2000 COMPLIANCE. The Borrower has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (including those affected by suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Borrower or any of its Subsidiaries (or its suppliers
and vendors) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), (ii) developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis, and (iii) to date, implemented that plan in accordance with
that timetable. The Borrower reasonably believes that all computer applications
(including those of its suppliers and vendors) that are material to its or any
of its Subsidiaries' business and operations will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000
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compliant"), except to the extent that a failure to do so could not reasonably
be expected to have Material Adverse Effect.
ARTICLE VII
AFFIRMATIVE COVENANTS
During the term of this Agreement, unless the Majority Banks shall
otherwise consent in writing:
7.1 FINANCIAL AND OTHER REPORTING. Borrower will maintain, and will
cause each Guarantor to maintain, a system of accounting established and
administered in accordance with GAAP, and furnish to Banks:
(i) Within 90 days after the close of each fiscal
year, (A) an unqualified (or qualified as reasonably acceptable to the
Majority Banks) audited financial statements of Borrower certified by a
nationally recognized independent certified public accountant firm,
reasonably acceptable to Agent, prepared in accordance with GAAP on a
consolidated and consolidating basis, including balance sheets as of
the end of such fiscal year and statements of income and surplus and
cash flows with schedules, in each case setting forth in comparative
form the figures for the preceding fiscal year, accompanied by a
certificate from the accounting firm acceptable to Agent, and (B)
unaudited financial statements, prepared in accordance with GAAP
(excluding footnotes) on a consolidated and consolidating basis for
Borrower and its respective Subsidiaries, including balance sheets as
of the end of such fiscal year and statements of income and surplus and
cash flows, with schedules. Each of the documents described in this
paragraph shall also be accompanied by a current certificate signed by
the Borrower's chief financial officer or treasurer, certifying on
behalf of the Borrower and its Subsidiaries that it has no knowledge of
any Event of Default or Unmatured Event of Default and that the
document it accompanies is correct and complete to the best of its
knowledge and belief.
(ii) Within forty-five (45) days after the close of
the first three (3) quarterly periods of each fiscal year, for Borrower
and each Guarantor and their respective Subsidiaries, on a consolidated
and a consolidating basis, unaudited financial statements, including
balance sheets as of the end of such period, statements of income,
surplus and cash flows, in each case for the portion of the fiscal year
ending with such fiscal period. All consolidated balance sheets shall
set forth in comparative form figures for the preceding year end. All
such income statements shall reflect current period and year-to-date
figures. Each of the documents described in this paragraph shall also
be accompanied by a current certificate signed by the Borrower's chief
financial officer or treasurer, certifying on behalf of the Borrower
and its Subsidiaries that it has no knowledge of any Event of Default
or Unmatured Event of Default and that the document
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it accompanies is correct and complete to the best of its knowledge and
belief.
(iii) Within forty-five (45) days after the end of
each of the first three quarterly periods, and within ninety (90) days
after the end, of each fiscal year, a certificate of the Borrower's
chief financial officer or treasurer, in form and detail acceptable to
Agent, as to Borrower's compliance with each Financial Covenant Test
and certain financial covenants in Article VIII, formation and
existence of Subsidiaries, and existence of any Event of Default or
Unmatured Event of Default (at present, Agent and Borrower contemplate
using a certificate in the form of EXHIBIT "H" hereto).
(iv) Within forty-five (45) days after the end of
each fiscal quarter, (a) detailed consolidated cash flow and source and
use of funds statements, and budgeted cash flow projections for each
project or entity in which Borrower or any of its Subsidiaries has an
interest, in the form presently provided to Agent in connection with
its Refinanced Loans, and (b) a summary of the status of all threatened
and actual actions, suits, investigations, and proceedings required to
be reported pursuant to clause (ix) of this Section 7.1, each certified
by the Borrower's chief financial officer or treasurer as being correct
and complete.
(v) By the fifteenth (15th) day of each calendar
month, (a) a Borrowing Base Certificate of the chief financial officer
or treasurer of Borrower, with respect to the Inventory Valuation Date
occurring on the last day of the immediately preceding calendar month,
(b) and a summary, in form and detail acceptable to Agent, showing, as
to the Borrower and each of its Subsidiaries, all construction in
progress, land development activity, and operations of all residential
projects owned, wherever located, (c) for all residential projects, a
land inventory analysis report, in form and detail acceptable to Agent,
showing the Borrower's and each Subsidiary's inventory of sold but
unclosed Housing Units, and schedule indicating (1) project name, (2)
location, (3) number of lots/units, (4) closed lots/units, (5)
remaining lots/units, (6) lots/units completed or under construction
(segregated by sold, spec, leased, and model lots/units), (7)
lots/units sold but not started, (8) lots/units under contract, and (9)
lots/units not sold and not under construction, and (d) a report on
monthly sales, on a per project basis, in the form presently provided
to Agent in connection with its Refinanced Loans.
(vi) As soon as possible and in any event within ten
(10) days after Borrower knows that any Reportable Event has occurred
with respect to any Plan, a statement, signed by an Authorized Officer
of Borrower, describing said Reportable Event and the action which
Borrower (or any Subsidiary) proposes to take with respect thereto.
(vii) As soon as possible, and in any event within
thirty (30) days after Borrower knows or has reason to know that any
circumstances exist that constitute
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grounds entitling the PBGC to institute proceedings to terminate a Plan
subject to ERISA with respect to Borrower or any member of the
Controlled Group and promptly but in any event within two (2) Business
Days of receipt by Borrower, any Subsidiary or any member of the
Controlled Group of notice that the PBGC intends to terminate a Plan or
appoint a trustee to administer the same, and promptly but in any event
within five (5) Business Days of the receipt of notice concerning the
imposition of withdrawal liability in excess of $500,000.00 with
respect to Borrower, any Subsidiary or any member of the Controlled
Group (when all of such liabilities are aggregated), a certificate of
an Authorized Officer setting forth all relevant details of such event
and the action which Borrower (or any Subsidiary) proposes to take with
respect thereto.
(viii) Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements (including form
8-K, 10-K and 10-Q, exclusive of exhibits unless otherwise requested by
Agent), and reports and communications which Borrower sends to its
stockholders, and copies of all regular, periodic, and special reports,
and all registration statements (exclusive of exhibits unless otherwise
requested by Agent) which Borrower is required to file with the
Securities and Exchange Commission or any governmental authority which
may be substituted therefor, or with any national securities exchange,
and, upon publication or any earlier dissemination, copies of any and
all press releases by Borrower.
(ix) Promptly after the commencement thereof, notice
of all threatened or actual actions, suits, investigations and
proceedings before any arbitrator, court or governmental department,
commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting Borrower or any Subsidiary (a) which, if determined
adversely to Borrower or any Subsidiary, could reasonably be expected
to have a Material Adverse Effect or (b) in which liability not covered
by insurance in excess of $1,500,000.00 (in the aggregate with respect
to all actions, suits, investigations or proceedings) is claimed and
alleged against Borrower or any Subsidiary.
(x) As soon as possible and in any event within ten
(10) days after receipt by Borrower or any Subsidiary, a copy of (a)
any written notice or claim to the effect that Borrower or any
Subsidiary is or may be liable to any Person as a result of the release
of any toxic or hazardous waste or substance into the environment, and
(b) any notice alleging any violation of any federal, state or local
environmental, health or safety law or regulation by Borrower or any
Subsidiary.
(xi) As and when filed, copies of all federal tax
returns filed by the Borrower or any Subsidiary.
(xii) Such other information (including non-financial
information) as Agent may from time to time reasonably request.
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7.2 USE OF PROCEEDS. Subject to the limitations contained in this
Agreement, Borrower will use the proceeds of Advances to pay and retire all
Refinanced Loans, to pay, redeem and retire all of the Old Senior Notes in full,
to fund future capital expenditures and for land acquisition, development,
construction, working capital and general corporate purposes and to repay
outstanding Advances. Borrower will not, and will not permit any Guarantor or
Subsidiary to, use any of the proceeds of the Advances to purchase or carry any
"margin stock" (as defined in Regulation U) or, except as otherwise permitted by
this Agreement, to purchase any securities in any transaction that is subject to
Sections 13 and 14 of the Securities Exchange Act of 1934, as amended.
7.3 NOTICE OF CERTAIN EVENTS. Borrower will, and will cause each
Guarantor to, give prompt notice in writing to Agent of the occurrence of (i)
any change of address or name of Borrower or any Guarantor, (ii) any Event of
Default or Unmatured Event of Default, (iii) Borrower's failure to satisfy any
Financial Covenant Test, and (iv) any other development, financial or otherwise,
that has had or would be reasonably expected to have a Material Adverse Effect.
7.4 CONDUCT OF BUSINESS. Except as otherwise permitted under this
Agreement, Borrower will, and will cause each Guarantor to, carry on and conduct
business in the same general manner and in substantially the same fields of
enterprise as presently conducted, to do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic corporation in
their respective jurisdictions of incorporation, maintain all requisite
authority to conduct business in each jurisdiction in which business is
conducted, and maintain all material rights, franchises, licenses, patents,
copyrights, trademarks, trade names or other intellectual property rights, free
from burdensome restrictions and infringements that could have a Material
Adverse Effect; provided, however, that nothing contained herein shall prohibit
the dissolution of a Guarantor after written notice to Agent as long as another
Guarantor or Borrower succeeds to the assets, liabilities and business of the
dissolved Guarantor.
7.5 TAXES. Borrower will, and will cause each Guarantor to, pay prior
to delinquency all taxes, assessments and governmental charges and levies upon
them or their income, profits or Property, except (i) those that are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been established in accordance with GAAP, and (ii) to the
extent that the failure to do so would not reasonably be expected to have and
does not have a Material Adverse Effect.
7.6 INSURANCE. Borrower will, and will cause each Guarantor to,
maintain with financially sound and reputable insurance companies insurance on
all their Property in such amounts and covering such risks as is consistent with
sound business practice and usually carried by companies similarly situated
engaged in the same or similar business, and Borrower will furnish to Agent upon
request full information as to the insurance carried, including, without
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limitation, certificates of insurance naming Banks as additional insureds as
their interests may appear.
7.7 COMPLIANCE WITH LAWS. Borrower will, and will cause each Guarantor
to, comply with all laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except to the extent
that the failure to do so would not reasonably be expected to have and does not
have a Material Adverse Effect.
7.8 MAINTENANCE OF PROPERTIES. Borrower will, and will cause each
Guarantor to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, except to the extent
that the failure to do so would not reasonably be expected to have and does not
have a Material Adverse Effect.
7.9 INSPECTION. Borrower will, and will cause each Guarantor to, permit
Agent and Banks, by their respective representatives and agents, to inspect any
of the Property, corporate (or partnership) books and financial records of
Borrower and Guarantors to examine and make copies of the books of accounts and
other financial records of Borrower and Guarantors, and to discuss the affairs,
finances and accounts of Borrower and Guarantors with, and to be advised as to
the same by, their respective officers after reasonable notice (which may be
oral) not to exceed three (3) Business Days (except in an emergency, when no
notice shall be required) and at such reasonable times and intervals and for
such purposes as Agent may designate.
7.10 ENVIRONMENT. Without limiting Section 7.7, 7.9 or any other
provision of this Agreement, Borrower will, and will cause Guarantor to, (i)
comply with the provisions of all federal, state, and local environmental,
health, and safety laws, codes and ordinances, and all rules and regulations
issued thereunder; (ii) promptly contain and remove or otherwise remediate any
hazardous discharge from or affecting the Property of Borrower or any Guarantor,
to the extent required by and in compliance with all applicable laws; (iii)
promptly pay any fine or penalty assessed in connection therewith or contest the
same in good faith; and (iv) permit Agent to inspect such Property, to conduct
tests thereon, and to inspect all books, correspondence, and records pertaining
thereto after reasonable notice (which may be oral) not to exceed three (3)
Business Days (except in an emergency, when no notice shall be required) and at
reasonable hours and places; and (v) at the request of the Majority Banks, and
at Borrower's expense, provide a report of a qualified environmental engineer,
satisfactory in scope, form, and content to the Majority Banks, and such other
and further assurances reasonably satisfactory to the Majority Banks that any
condition or occurrence hereafter identified in any updated form 10-K or 10-Q
has been corrected.
7.11 WHOLLY OWNED STATUS. Borrower shall ensure that each of the
Subsidiaries (i.e. - each of the Guarantors) is a Wholly-Owned Subsidiary of
Borrower.
7.12 RANKING OF OBLIGATIONS. Borrower hereby subordinates to the
Obligations any
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and all Indebtedness owing to Borrower by any Subsidiary or Affiliate and shall
ensure that (i) all Indebtedness between or among Borrower and any Subsidiary or
Affiliate remains subordinate, in right of payment and standing, to the
Obligations under the Loan Documents, and (ii) all Obligations under the Loan
Documents shall be and constitute (a) unconditional general obligations of
Borrower ranking at least pari passu with all of its other unsecured debt or (b)
when required pursuant to Section 2.22 during any Conversion Period, secured
obligations ranking prior and superior to its unsecured debt.
7.13 RETIREMENT OF OLD SENIOR NOTES. Borrower shall pay, redeem and
retire all of the Old Senior Notes in full on or before October 31, 1998.
7.14 YEAR 2000 COMPLIANCE. The Borrower will promptly notify the Agent
in the event the Borrower discovers or determines that any computer application
(including those of its suppliers and vendors) that is material to its or any of
its Subsidiaries' business and operations will not be Year 2000 compliant on a
timely basis, except to the extent that such failure could not reasonably be
expected to have a Material Adverse Effect.
ARTICLE VIII
NEGATIVE COVENANTS
During the term of the Agreement, unless the Majority Banks shall
otherwise consent in writing:
8.1 DIVIDENDS. Borrower will not, and will not permit any Guarantor to,
directly or indirectly, declare, make or pay, or incur any liability to make or
pay, or cause or permit to be declared, made or paid, any Dividend if, prior to
or after giving effect to the declaration and payment of any Dividend, there
shall exist any Event of Default under this Agreement. The foregoing paragraph
will not prevent the payment of any Dividend by Borrower within sixty (60) days
after the date of its declaration if such Dividend could have been made on the
date of its declaration in compliance with the foregoing provisions.
8.2 INDEBTEDNESS. Borrower will not, and will not permit any Guarantor
to, create, incur or suffer to exist any Indebtedness, except, without
duplication and without duplication as to Borrower and Guarantors:
(i) The Loans and the Guaranty.
(ii) Indebtedness existing on the date hereof (and
not otherwise permitted under this Section 8.2) and described in
SCHEDULE "8.2(II)" hereto and Refinancing Indebtedness with respect
thereto.
(iii) Indebtedness under a Warehouse Facility;
provided that the
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amount of such Indebtedness (including funding drafts issued
thereunder) outstanding at any time pursuant to this clause (iii) shall
not exceed the fair market value of the mortgages pledged to secure
Indebtedness thereunder.
(iv) Rate Hedging Obligations with respect to
Borrower's Indebtedness.
(v) Intercompany Indebtedness between Borrower, any
Guarantor and/or any Subsidiary, provided that such Indebtedness is
subordinate to the Obligations and to the obligations of the Guarantors
under the Guaranty to the reasonable satisfaction of Agent.
(vi) Trade accounts payable and accrued expenses
arising or occurring in the ordinary course of business.
(vii) Indebtedness constituting Capitalized Lease
Obligations.
(viii) Contingent Indebtedness with respect to
undrawn Letters of Credit, banker's acceptances, and performance,
completion, guarantee, surety, construction and similar bonds entered
into in the ordinary course of business not to exceed in the aggregate
at any time outstanding $35,000,000.00 until October 31, 1999 or
$30,000,000.00 after October 31, 1999.
(ix) Non-Recourse Indebtedness incurred in the
ordinary course of business in an aggregate amount outstanding at any
time not to exceed $5,000,000.00, plus, until April 30, 1999,
Non-Recourse Indebtedness existing on the date of this Agreement and
disclosed in Section 6.4.
(x) (a) Indebtedness evidenced by (1) the Senior
Notes (including any related guaranties in effect that are required by
the terms of the Indenture) and Refinancing Indebtedness with respect
thereto, and (2) until October 31, 1998, the Old Senior Notes and (b)
other Public Indebtedness that constitutes a general unsecured
obligation ranking pari passu in right of payment and standing to the
Senior Notes and the Obligations (until any Conversion Period, during
which the Obligations shall be become senior ranking secured
obligations as provided in Section 2.22), provided the Public
Indebtedness is scheduled to mature no earlier than the Facility
Maturity Date and the terms and conditions of the Public Indebtedness
are no more restrictive or adverse to Borrower or its Subsidiaries or
the rights of the Banks under this Agreement and the other Loan
Documents than those in the Indenture on the date it was issued
(including, without limitation, with respect to the ability to incur
Indebtedness and grant liens to secure Indebtedness, financial
performance, and events of default).
(xi) Notwithstanding and in addition to Indebtedness
permitted by
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clause (ix) of this Section 8.2, and in accordance with Section 8.5
(v), the sum of Non-Recourse Indebtedness plus Investments in Joint
Ventures may total up to an additional $20,000,000.00 in the aggregate
at any time outstanding, if the Borrower is in compliance with each
Financial Covenant Test at the time of and after giving effect to such
incurrence (on a current pro forma rather than quarterly basis).
8.3 MERGER. Borrower will not, nor will it permit any Guarantor to,
merge or consolidate with or into any other Person, unless:
(i) the Guarantor is merging with any other Guarantor
or Borrower, and Borrower, if applicable, is the continuing
corporation; or
(ii) a Subsidiary (other than a Guarantor) is merging
with Borrower or any Guarantor or another Subsidiary, and Borrower or
the Guarantor, if applicable, is the continuing corporation; and
(iii) no Event of Default shall exist or shall occur
after giving effect to such transaction; and
(iv) after giving effect to such transaction,
Borrower shall be in compliance with each Financial Covenant Test; and
(v) if the merger or consolidation involves a Person
other than Borrower or any Guarantor, (a) the other Person to the
transaction is in a Related Business, (b) the amount paid for the
aggregate net worth of the acquired non-related entities (including,
without limitation for goodwill and any premiums paid) in all such
transactions during any 24-month period shall not exceed
$10,000,000.00, whether paid in cash or in kind (including, without
limitation with capital stock), and (c) Borrower or the Guarantor, as
applicable, is the continuing corporation; and
(vi) the transaction is not otherwise prohibited
under this Agreement; and
(vii) if required by Agent, the continuing
corporation ratifies and confirms by supplemental document in a form
reasonably satisfactory to Agent all of the obligations of Borrower or
such Guarantor, as the case may be, under the Loan Documents and/or the
Guaranty.
8.4 SALE OF ASSETS. Borrower will not, and will not permit any
Guarantor to, lease, sell or otherwise dispose of its Property, in a single
transaction or a series of transactions, to any other Person except (i) for
sales or leases in the ordinary course of business or of Property that is
obsolete or worn out, (ii) sales, leases or dispositions by any Subsidiary to
the Borrower or any
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other Subsidiary, and (iii) for leases, sales or other dispositions of its
Property that, together with all other Property of Borrower or such Guarantor
previously leased, sold or disposed of (other than in the ordinary course of
business) as permitted by this Section during the month in which any such lease,
sale or other disposition occurs, do not constitute a Material Portion of the
Property of Borrower or such Guarantor.
For purposes of this Section 8.4, "Material Portion" means any sale,
lease or other disposition of the Property of Borrower or any Guarantor which
would cause the principal amount of all Advances outstanding plus the aggregate
amount of the Facility Letter of Credit Obligations outstanding plus the
Aggregate Senior Indebtedness outstanding to exceed the Borrowing Base, after
taking into account any reduction of such amounts during the ensuing thirty (30)
days. If a Material Portion of the Property of Borrower or any Guarantor is
leased, sold or disposed of in violation of this Section 8.4, Borrower shall pay
to Agent for the benefit of Banks at the time of such lease, sale or disposal,
all amounts owed by Borrower pursuant to Section 2.2, taking into account the
effect of the lease, sale or disposal.
8.5 INVESTMENTS AND ACQUISITIONS. Borrower will not, and will not
permit any Guarantor to, make or suffer to exist any Investments (including
without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, or to create any Subsidiary or to become
or remain a partner in any partnership or joint venture, or to make any
Acquisition of any Person, except:
(i) Investments in Cash Equivalents.
(ii) Loans or advances made to officers, directors or
employees of Borrower or any Guarantor or any Subsidiary not exceeding
$100,000.00 in the aggregate.
(iii) Investments in interests in issuances of
collateralized mortgage obligations, mortgages (including funding by
Borrower of mortgages originated by a Guarantor in the ordinary course
of business), mortgage loan servicing or other mortgage related assets.
(iv) Investments of Borrower in a Guarantor or of a
Guarantor in another Guarantor.
(v) Investments in Joint Ventures, provided that the
outstanding amount of such Investments of Borrower and its Subsidiaries
do not at any time exceed $5,000,000.00, or, if Borrower is in
compliance with each Financial Covenant Test when the Investments
described in this clause (v) are made after giving effect thereto (on a
current pro forma rather than quarterly basis), then, in addition to
the $5,000,000.00 Investments in Joint Ventures permitted in this
clause (v), and in accordance with Section 8.2 (xi), the sum of
Non-Recourse Indebtedness and Investments in Joint Ventures may
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total up to an additional $20,000,000.00 in the aggregate at any time
outstanding.
(vi) Investments permitted by Section 8.3.
(vii) Stock, obligations or securities received in
satisfaction of debts owing to Borrower or any Guarantor in the
ordinary course of business.
(viii) Pledges or deposits in cash by Borrower or any
Guarantor to support surety bonds, performance bonds or guarantees of
completion in the ordinary course of business.
(ix) Investments pursuant to Borrower's or any
Guarantor's employment compensation plans or agreements.
(x) Investments in Rate Hedging Obligations with
respect to Borrower's Indebtedness.
8.6 LIENS. Borrower will not, and will not permit any Guarantor to,
create, incur, or suffer to exist any Lien in, of or on the Property of Borrower
or any Guarantor, except:
(i) Permitted Liens.
(ii) Notwithstanding any higher dollar limitations
applicable to any litigation, suits or proceedings pursuant to Section
6.7, judgments and similar Liens arising in connection with court
proceedings which do not exceed in the aggregate at any time
$500,000.00; provided the execution or enforcement thereof is stayed
and the claim is being contested in good faith, adequate reserves have
been established in accordance with GAAP, and the same do not give rise
to an Event of Default or Unmatured Event of Default.
(iii) Liens securing Non-Recourse Indebtedness of
Borrower or any Guarantor permitted by Section 8.2, provided that (A)
the amount of such Indebtedness is greater than fifty percent (50%) of
the fair market value of the Property encumbered by the Liens, (B) such
Liens apply and attach only to the property financed (out of the net
proceeds of such Indebtedness) within ninety (90) days of the creation,
incurrence or sufferance of such Non-Recourse Indebtedness.
(iv) Liens securing a Warehouse Facility, provided
that such liens shall not extend to any assets other than the
mortgages, promissory notes and other collateral that secures mortgage
loans made by Borrower or any Guarantor.
(v) Liens in respect of Rate Hedging Obligations.
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(vi) Customary Liens (other than any lien imposed by
ERISA) incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security.
(vii) Customary Liens incurred or deposits made to
secure the performance of tenders, bids, leases, statutory obligations,
surety and appeal bonds, progress payments, government contracts and
other obligations of like nature (exclusive of obligations for the
payment of borrowed money), in each case, incurred in the ordinary
course of business, provided such Liens do not attach to any real
estate.
(viii) Leases or subleases granted to others not
materially interfering with the ordinary conduct of the business of
Borrower or any Guarantor.
(ix) Liens of the Collateral Documents granted
pursuant to the provisions of Section 2.22.
Notwithstanding anything herein to the contrary, Borrower will not, and will not
permit any Guarantor to, create, incur, or suffer to exist any Lien in, of or on
the capital stock of any Guarantor.
8.7 REDEMPTION. Borrower will not purchase or redeem any of its capital
stock heretofore or hereafter issued, except that Borrower may purchase or
redeem its capital stock (i) to the extent that the consideration for such
redemption or purchase is limited to capital stock of Borrower, or (ii) if the
consideration for such purchaser or redemption is other than capital stock of
Borrower and does not exceed, in the aggregate for all such purchases and
redemptions from and after the date hereof, $5,000,000.00.
8.8 AFFILIATES. Borrower will not, and will not permit any Guarantor
to, enter into any transaction (including, without limitation, the purchase or
sale of any Property or service) with, or make any payment or transfer to, any
Affiliate (other than a Subsidiary) except (i) in the ordinary course of
business and/or pursuant to the reasonable requirements of Borrower's or such
Guarantor's business and, in either event, upon fair and reasonable terms no
less favorable to Borrower or such Guarantor than Borrower or such Guarantor
would obtain in a comparable arms-length transaction, (ii) Investments permitted
under Section 8.5, (iii) pursuant to employment compensation plans and
agreements, and (iv) with officers, directors and employees of Borrower or any
Subsidiary so long as the same are in compliance with this Agreement and duly
authorized pursuant to the articles of incorporation or bylaws (or procedures
conducted in accordance therewith) of Borrower or such Subsidiary. Majority
Banks shall not unreasonably withhold consent to any request by Borrower to
approve a transaction, payment or transfer restricted by this Section 8.8.
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8.9 SUBORDINATED INDEBTEDNESS. Borrower will not, nor will it permit
any Subsidiary to, directly or indirectly voluntarily prepay, defease, or in
substance defease, purchase, redeem or retire any Subordinated Indebtedness;
provided, however, that the foregoing shall not prohibit payment, redemption and
the repayment or prepayment of Subordinated Indebtedness solely from the net
proceeds of other Subordinated Indebtedness.
8.10 AMENDMENTS. Borrower will not, nor will it permit any Subsidiary
to, amend or modify the Indenture, the Old Indenture, or the Senior Notes or the
Old Senior Notes, except for amendments or modifications that do not (i) impose
upon Borrower or any Subsidiary obligations more onerous than those contained
therein as of the date of this Agreement, or (ii) otherwise adversely affect
Borrower or any Subsidiary or the rights of the Banks under this Agreement.
8.11 NEGATIVE PLEDGE AGREEMENTS PROHIBITED; AND OTHER PROHIBITED
AGREEMENTS. Borrower will not, nor will it permit any Subsidiary to, directly or
indirectly, agree or enter into or become liable under any agreement that at any
time: (i) restricts or prohibits the creation, incurrence or existence of any
Lien on any of their respective Properties, whether now owned or hereafter
acquired (but only to the extent prohibition by Banks of these types of
agreements and liabilities would not result in a breach of the Indenture and
Senior Notes), (ii) restricts or prohibits the amount of Dividends or loans that
may be paid or made to the Borrower by any of its Subsidiaries or Affiliates, or
(iii) that would have a Material Adverse Effect.
8.12 INTERCOMPANY DEBT. Borrower will not, nor will it permit any
Subsidiary to, modify, cancel or forgive any existing Indebtedness between or
among any of them, or accelerate, make demand for or enforce payment of any
Indebtedness from Borrower to any of its Subsidiaries.
8.13 ANCILLARY BUSINESS LIMITATIONS. Notwithstanding any conflicting
interpretations of Sections 8.3, 8.5 or other provisions of this Agreement,
Borrower will not, nor will it permit any Subsidiary to, engage in, conduct or
carry on any business, except (i) for sale homebuilding operations, (ii)
construction and operation of sales centers in master planned unit developments,
(iii) financial services operations supporting and relating to its homebuilding
operations, and (iv) manufactured housing, rental apartments, or commercial
properties of any type or other business ancillary to its for sale homebuilding
operations where the Investment does not exceed, in the aggregate, the lesser of
(a) $2,000,000.00, or (b) 1.5% of Consolidated Tangible Net Worth.
8.14 FISCAL YEAR CALCULATION. Borrower shall not, nor permit any
Subsidiary to, change the annual dates of commencement or end (presently,
October 31) of their fiscal years.
8.15 MATERIAL ADVERSE EFFECT. Borrower will not, nor will it permit any
Subsidiary to, suffer or permit to exist or occur any change in the business,
Property, condition (financial or otherwise) or results of operations of
Borrower and Guarantors (taken as a whole) that has or
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would reasonably be expected to have a Material Adverse Effect.
ARTICLE IX
FINANCIAL COVENANTS
During the term of this Agreement, unless the Majority Banks shall
otherwise consent in writing:
9.1 CONSOLIDATED TANGIBLE NET WORTH TEST. Borrower's Consolidated
Tangible Net Worth shall not be less than (i) $147,000,000.00, plus (ii) fifty
percent (50%) of the cumulative Consolidated Net Income earned during each
quarter after April 30, 1998 (excluding any quarter in which there is a loss),
plus (iii) one hundred percent (100%) of the net proceeds of any Subordinated
Indebtedness or any capital stock or other equity interest issued by Borrower
after the date of this Agreement (the "Consolidated Tangible Net Worth Test").
9.2 LEVERAGE TEST. Borrower shall maintain a ratio of Consolidated
Liabilities to Consolidated Tangible Net Worth of not more than 2.0:1.0 (the
"Leverage Test").
9.3 INTEREST COVERAGE TEST. Borrower shall maintain a ratio of EBITDA
to Consolidated Interest Incurred of not less than 2.0:1.0 (the "Interest
Coverage Test").
9.4 FIXED CHARGE COVERAGE TEST. Borrower shall maintain a ratio of
EBITDAR to Fixed Charges of not less than 1.75:1.0 (the "Fixed Charge Coverage
Test").
9.5 DIVIDEND PAYOUT TEST. The aggregate amount of cash Dividends paid
by Borrower on its capital stock during the most recent fiscal quarterly period
shall not exceed fifty percent (50%) of its Consolidated Net Income for such
period (the "Dividend Payout Test").
9.6 LAND HOLDING TEST. The book values, determined on a consolidated
basis in conformity with GAAP of all (a) Spec Lots, plus (b) Land Under
Development, plus (c) Land Not Under Development, less the book value,
determined in accordance with GAAP, of all unsold land owned by Engle
Homes/Pembroke, Inc. shall not at any time exceed one hundred twenty-five
percent (125%) of Consolidated Tangible Net Worth (the "Land Holding Test").
ARTICLE X
EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an Event of Default:
10.1 REPRESENTATIONS AND WARRANTIES. Any representation or warranty
(except the representations and warranties in Section 6.7, but only to the
extent the same are made, or
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deemed made, after the date hereof) made or deemed made by or on behalf of
Borrower or any Guarantor to Banks, the Issuing Bank or Agent under or in
connection with this Agreement, any Loan Document, or any certificate or
information delivered in connection with this Agreement or any other Loan
Document shall not be true and correct in any material respect on the date as of
which made.
10.2 NON-PAYMENT. Nonpayment of principal of any Note when due, or
nonpayment of interest upon any Note or of any fees or other Obligations under
any of the Loan Documents within five (5) Business Days after the same becomes
due.
10.3 OTHER DEFAULTS. The breach by Borrower of any of the terms or
provisions of this Agreement (other than any term or provision of Article IX
[which are separately addressed in Section 10.15] or any term or provision
covered by another Section of this Article X) which is not remedied within
thirty (30) days after the earlier of: (i) knowledge of the occurrence of such
breach by Borrower or any Guarantor, or (ii) notice of the breach having been
given to or received by Borrower or any Guarantor.
10.4 OTHER INDEBTEDNESS. Notwithstanding any higher dollar limitations
applicable to any litigation, suits or proceedings pursuant to Section 6.7:
(a) Failure of Borrower or any Guarantor to pay when due
(after any applicable grace period and after notice from the holder thereof) any
Indebtedness exceeding $100,000.00 in any instance or $500,000.00 in the
aggregate; or
(b) The default (after any applicable grace period and after
notice from the holder thereof) by Borrower or any Guarantor in the performance
of any term, provision or condition contained in any agreement under which any
Indebtedness exceeding $100,000.00 in any instance or $500,000.00 in the
aggregate was created or is governed; or
(c) Any other event shall occur or condition exist (after any
applicable grace period and after notice from the holder thereof), the effect of
which is to cause, or to permit the holder or holders of any Indebtedness of
Borrower or any Guarantor exceeding $100,000.00 in any instance or $500,000.00
in the aggregate to cause such Indebtedness to become due prior to its stated
maturity; or
(d) Any Indebtedness of Borrower or any Guarantor exceeding
$100,000.00 in any instance or $500,000.00 in the aggregate shall be declared to
be due and payable or required to be prepaid (other than by a regularly
scheduled payment) prior to the stated maturity thereof (after any applicable
grace period and after notice from the holder thereof); or
(e) Any contingent Indebtedness of Borrower or any Guarantor
becomes direct or absolute (including, without limitation, under any Letter of
Credit, surety bond,
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construction bond, or other contingent obligation); or
(f) Borrower or any Guarantor shall not pay, or shall admit in
writing its inability to pay, its debts generally as they become due.
10.5 BANKRUPTCY. Borrower or any Guarantor shall:
(i) have an order for relief entered with respect to
it under the Federal bankruptcy laws as now or hereafter in effect;
(ii) make an assignment for the benefit of creditors;
(iii) apply for, seek, consent to, or acquiesce in,
the appointment of a receiver, custodian, trustee, examiner, liquidator
or similar official for it or any Substantial Portion of its Property;
(iv) institute any proceeding seeking an order for
relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail
to file, within the applicable time period for the filing thereof, an
answer or other pleading denying the material allegations of any such
proceeding filed against it; or
(v) fail to contest in good faith any appointment or
proceeding described in Section 10.6.
10.6 RECEIVER. A receiver, trustee, examiner, liquidator or similar
official shall be appointed for Borrower or any Guarantor or any Substantial
Portion of its Property without the application, approval or consent of Borrower
or Guarantors, or a proceeding described in Section 10.5(v) shall be instituted
against Borrower or any Guarantor and such appointment continues undischarged or
such proceeding continues undismissed or unstayed for a period of sixty (60)
consecutive days.
10.7 JUDGMENT. Notwithstanding any higher dollar limitations applicable
to any litigation, suits or proceedings pursuant to Section 6.7, Borrower or any
Guarantor shall fail within sixty (60) days to pay, bond or otherwise discharge
any judgment or order (which has not been stayed on appeal and is not otherwise
being appropriately contested in good faith) for the payment of money in excess
of $100,000.00 in any instance or $500,000.00 in the aggregate or which has a
Material Adverse Effect.
10.8 UNFUNDED LIABILITIES.
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(a) Any Unfunded Liabilities under any Single Employer Plan
shall exist; or
(b) Any Reportable Event shall occur in connection with any
Plan, which Reportable Event has had or would reasonably be expected to have a
Material Adverse Effect.
10.9 WITHDRAWAL LIABILITY. Borrower, or any Guarantor or any member of
the Controlled Group shall have been notified by the sponsor of a Multiemployer
Plan that it has incurred withdrawal liability to such Multiemployer Plan in an
amount which, when aggregated with all other amounts required to be paid to
Multiemployer Plans by Borrower or such Guarantor or any other member of the
Controlled Group as withdrawal liability (determined as of the date of such
notification), exceeds $500,000.00 or requires payments exceeding $100,000.00
per annum; provided, however, that such event shall not constitute an Event of
Default as long as Borrower, such Guarantor or the Controlled Group member, as
applicable, is contesting in good faith the imposition of withdrawal liability.
10.10 INCREASED CONTRIBUTIONS. Borrower, or any Guarantor, or any other
member of the Controlled Group shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is in reorganization, if as a
result of such reorganization the aggregate annual contributions of Borrower,
Guarantors and the other members of the Controlled Group (taken as a whole) to
all Multiemployer Plans which are then in reorganization have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan years of each such Multiemployer Plan immediately preceding the
plan year in which the reorganization occurs by an amount exceeding $100,000.00.
10.11 CHANGE IN CONTROL.
(a) Any Change in Control shall occur; or
(b) Alec Engelstein and Harry Engelstein and their wives,
children and children's spouses, and grandchildren fail to maintain beneficial
ownership of at least thirty percent (30%) of the issued and outstanding capital
stock of Borrower.
10.12 DISSOLUTION. The dissolution or liquidation of Borrower or any
Guarantor shall occur, except as permitted under Section 8.3.
10.13 GUARANTY. The Guaranty shall fail to remain in full force or
effect with respect to any Guarantor or any action shall be taken by any
Guarantor to discontinue or to assert the invalidity or unenforceability of the
Guaranty, or any Guarantor shall fail to comply with any of the terms or
provisions of the Guaranty, or any Guarantor denies that it has any further
liability under the Guaranty or gives notice to such effect.
10.14 COLLATERAL. Borrower shall fail to provide in accordance with
Section 2.22 (i) all
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Collateral and Collateral Documents for the Obligations, or (ii) all Due
Diligence Documents relating to the Collateral.
10.15 FINANCIAL COVENANTS.
(a) The ratio of Consolidated Liabilities to Consolidated
Tangible Net Worth equals or exceeds 3.0:1.0 for two (2) consecutive fiscal
quarters or three (3) of any trailing five (5) fiscal quarters; or
(b) The ratio EBITDA to Consolidated Interest Incurred equals
or is less than 1.25:1.0 for two (2) consecutive or three (3) of any trailing
five (5) fiscal quarters; or
(c) Borrower shall fail to satisfy (i) the Consolidated
Tangible Net Worth Test as required in Section 9.1, (ii) the Leverage Test as
required in Section 9.2, (iii) the Interest Coverage Test as required in Section
9.3, (iv) the Fixed Charge Coverage Test as required in Section 9.4, (v) the
Dividend Payout Test as required in Section 9.5, or (vi) the Land Holding Test
as required in Section 9.6 and such failure (for any, even if not the same,
Financial Covenant Test) continues for three (3) consecutive fiscal quarters or
four (4) of any trailing six (6) fiscal quarters.
10.16 SENIOR DEBT RATING. Borrower shall fail to maintain for more that
ninety (90) days a Senior Debt Rating (i) with at least two (2) of the following
rating agencies: Moody's Investors Service, Inc., Standard & Poor's Corporation,
Fitch's Investment Service and Duff & Phelps Credit Rating Co., one (1) of which
must be Moody's Investors Service, Inc. or Standard & Poor's Corporation, or
(ii) where Standard & Poor's Corporation issues a rating of at least a B or
Moody's Investors Services, Inc. issues a rating of at least a B2.
ARTICLE XI
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
11.1 ACCELERATION; REMEDIES.
(a) If any Event of Default described in Section 10.5 or 10.6
occurs with respect to Borrower or any Guarantor, the obligations of Banks to
make Loans and of the Issuing Bank to issue Facility Letters of Credit hereunder
shall automatically terminate and the Obligations shall immediately become due
and payable without any election or action on the part of Agent, the Issuing
Bank or any Bank. If any other Event of Default occurs, the Majority Banks may
terminate or suspend the obligations of Banks to make Loans and of the Issuing
Bank to issue Facility Letters of Credit hereunder, or declare the Obligations
to be due and payable, or both, whereupon the Obligations shall become
immediately due and payable, without presentment, demand, protest or notice of
any kind, all of which Borrower hereby expressly waives.
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(b) Upon the occurrence of any Event of Default and upon the
directive of the Majority Banks, Agent or, but only upon directive of all of the
Banks, any Bank shall proceed to protect, exercise and enforce the rights and
remedies of Agent and Banks under the Loan Documents and the Guaranty against
Borrower, any Guarantor and any other party and such other rights and remedies
as are provided by law or equity.
(c) The order and manner in which Banks' rights and remedies
are to be exercised shall be determined by the Majority Banks in their sole
discretion, and all payments received by Agent and Banks, or any of them, shall
be applied first to the costs and expenses (including attorneys' fees and
disbursements) of Agent and of Banks, and thereafter paid pro rata to each Bank
in the same proportions that each Bank's Commitment bears to the Aggregate
Commitment, without priority or preference among Banks. Regardless of how each
Bank may treat payments for the purpose of its own accounting, for the purpose
of computing Borrower's obligations hereunder and under the Notes, payments
shall be applied first, to the costs and expenses of Agent and Banks, as set
forth above, second, to the payment of accrued and unpaid interest due under any
Loan Documents to and including the date of such application (ratably, and
without duplication, according to the accrued and unpaid interest due under each
of the Loan Documents), and third, to the payment of all other amounts
(including principal and fees) then owing to Agent or Banks under the Loan
Documents. No application of payments will cure any Event of Default, or prevent
acceleration, or continued acceleration, of amounts payable under the Loan
Documents, or prevent the exercise, or continued exercise, of rights or remedies
of Banks hereunder or thereunder or at law or in equity.
11.2 AMENDMENTS. Subject to the provisions of this Article XI, the
Majority Banks (or Agent with the consent in writing of the Majority Banks) and
Borrower may enter into agreements supplemental hereto for the purpose of adding
or modifying any provisions to the Loan Documents or changing in any manner the
rights of Banks or Borrower hereunder or waiving any Event of Default hereunder;
provided, however, that no such supplemental agreement shall, without the
consent of each Bank and Issuing Bank affected thereby:
(i) Extend the maturity of any Loan or Note or
forgive all or any portion of the principal amount thereof, or reduce
the rate of, or extend the time of payment of, interest or fees
thereon;
(ii) Release any or all Guarantors from any of their
obligations under the Guaranty or the Environmental Agreements;
(iii) Change the percentage specified in the
definition of Majority Banks;
(iv) Increase the amount of the Commitment of any
Bank hereunder, or permit Borrower to assign its rights under this
Agreement except by operation of law
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pursuant to a merger permitted under Section 8.3;
(v) Amend any provisions of this Agreement relating
to Facility Letters of Credit;
(vi) Amend any provisions of this Agreement relating
to Swing Line Advances without the consent of SunTrust; or
(vii) Amend this Section 11.2, Section 11.4, Section
12.7, Section 14.1, Section 14.2 or Section 15.2.3.
No amendment of any provision of this Agreement relating to Agent shall be
effective without the written consent of Agent. Agent may waive payment or
reduce the amount of the fees referred to in Section 13.12 or the fee required
under Section 15.3.2 without obtaining the consent of any other party to this
Agreement.
11.3 PRESERVATION OF RIGHTS. No delay or omission of any Bank or
Issuing Bank or Agent to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Event of Default or an
acquiescence therein, and the making of a Loan or the issuance, amendment or
extension of a Facility Letter of Credit notwithstanding the existence of an
Event of Default or the inability of Borrower to satisfy the conditions
precedent to such Loan or Facility Letter of Credit shall not constitute any
waiver or acquiescence. Any single or partial exercise of any such right shall
not preclude other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the terms, conditions or
provisions of the Loan Documents whatsoever shall be valid unless in writing
signed by Banks (and, if applicable, Agent) required pursuant to Section 11.2,
and then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to Agent, the Issuing Bank and Banks until the Obligations
have been paid in full.
11.4 NEW GUARANTOR.
(a) Unless otherwise agreed to by all of the Banks:
(i) Each Subsidiary of Borrower shall be a Guarantor
under this Agreement,
(ii) All Subsidiaries of Borrower in existence on the
date of this Agreement shall execute and deliver the Guaranty, and
(iii) All Subsidiaries of Borrower coming into
existence after the date of this Agreement (in each case, a "New Guarantor")
shall (1) be disclosed to Agent and Banks quarterly in the certificate provided
from time to time pursuant to clause (iii) of Section 7.1 (the
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"Compliance Certificate") and (2) become liable as a Guarantor and execute and
deliver the documents and instruments described in clause (b) of this Section
11.4.
(b) Unless otherwise agreed to by all of the Banks, Borrower
shall cause each New Guarantor to execute and deliver to Agent appropriate
documents and instruments whereby the New Guarantor assumes the obligations of a
Guarantor under the Guaranty and the other Loan Documents, and Borrower shall
deliver or cause to be delivered, by and with respect to each New Guarantor,
certificates, opinions and other documents substantially similar to those
required to be delivered under the provisions of Sections 5.1(i), (ii), (iii),
(iv) and (v) and such other documents as Agent or any Issuing Bank or their
respective counsel may reasonably request. All of the documents, instrument and
other items described in this clause (b) shall be in form and substance
satisfactory to Agent or such Issuing Bank, as the case may be, and shall be
delivered to Agent promptly after incorporation/formation of the New Guarantor
but in no event later than the date the next Compliance Certificate is required
to be furnished pursuant to clause (iii) of Section 7.1.
ARTICLE XII
GENERAL PROVISIONS
12.1 SURVIVAL OF REPRESENTATIONS. All representations and warranties of
Borrower contained in this Agreement shall survive delivery of the Notes and the
making of the Loans and the issuance, amendment or extension of any Facility
Letter of Credit herein contemplated.
12.2 GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Bank or Issuing Bank shall be obligated to
extend credit to Borrower in violation of any limitation or prohibition provided
by any applicable statute or regulation effective after the date of this
Agreement.
12.3 TAXES. Any recording, intangible, filing or stamp fees or taxes or
other similar assessments or charges made by any governmental or revenue
authority in respect of the Loan Documents shall be paid by Borrower, together
with interest and penalties, if any.
12.4 HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
12.5 ENTIRE AGREEMENT. The Loan Documents and the commitment letter
(including the letter agreements incorporated therein) referred to in this
Agreement embody the entire agreement and understanding among Borrower, Agent
and Banks and supersede all prior agreements and understandings among Borrower,
Agent, and Banks relating to the subject matter thereof.
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12.6 NATURE OF OBLIGATIONS; BENEFITS OF THIS AGREEMENT.
(a) The respective obligations of Banks hereunder are several
and not joint and no Bank shall be the partner or agent of any other (except to
the extent to which Agent is authorized to act as such). The failure of any Bank
to perform any of its obligations hereunder shall not relieve any other Bank
from any of its obligations hereunder.
(b) This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns.
12.7 EXPENSES; INDEMNIFICATION. Borrower shall reimburse Agent for any
reasonable costs, internal charges and out-of-pocket expenses (including
reasonable attorneys' fees and costs) paid or incurred by Agent in connection
with the preparation, negotiation, execution, delivery, review, amendment,
modification, and administration of the Loan Documents. Borrower also agrees to
reimburse Agent, Banks and each Issuing Bank for any reasonable costs, internal
charges and out-of-pocket expenses (including reasonable attorneys' fees and
time charges of attorneys for Agent, Banks and such Issuing Bank) paid or
incurred by Agent, any Bank or such Issuing Bank in connection with the
collection and enforcement of the Loan Documents. Borrower further agrees to
indemnify and hold harmless Agent and each Bank or Issuing Bank, its directors,
officers and employees against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not Agent or any Bank or
Issuing Bank is a party thereto and any amounts payable pursuant to Section
12.3) which any of them may pay or incur arising out of or relating to this
Agreement, the other Loan Documents, the transactions contemplated hereby or the
direct or indirect application or proposed application of the proceeds of any
Loan hereunder (except to the extent arising due to the gross negligence or
willful misconduct of the indemnified Person). The obligations of Borrower under
this Section shall survive the termination of this Agreement.
12.8 NUMBERS OF DOCUMENTS. All statements, notices, closing documents,
and requests hereunder shall be furnished to Agent with sufficient counterparts
so that Agent may furnish one to each of Banks.
12.9 ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.
12.10 SEVERABILITY OF PROVISIONS. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
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12.11 NONLIABILITY OF BANKS AND ISSUING BANK. The relationship between
Borrower and Banks and Agent shall be solely that of borrower and lender.
Neither Agent nor any Bank or Issuing Bank shall have any fiduciary
responsibilities to Borrower. Neither Agent nor any Bank or Issuing Bank
undertakes any responsibility to Borrower to review or inform Borrower of any
matter in connection with any phase of Borrower's business or operations.
12.12 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF FLORIDA, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
12.13 ARBITRATION. Subject to the provisions of this Section 12.13,
Borrower, Banks and Agent agree to submit to binding arbitration any and all
claims, disputes and controversies between or among them (and their respective
employees, officers, directors, attorneys, and other agents if permitted by law
or a contract between them and such persons) relating to this Agreement and the
Loan Documents and the negotiation, execution, collateralization,
administration, repayment, modification, extension or collection thereof or
arising thereunder. Such arbitration shall proceed in West Palm Beach, Florida,
shall be governed by Florida law and shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the
"AAA"), as modified in this Section 12.13. Judgment upon the award rendered by
each arbitrator(s) may be entered in any court having jurisdiction.
(a) Nothing in the preceding paragraph, nor the exercise of
any right to arbitrate thereunder, shall limit the right of any party hereto (1)
to foreclose against any real or personal property collateral encumbered by a
Mortgage or other Loan Document, or otherwise permitted under applicable law;
(2) subject to provisions of applicable law, to exercise self-help remedies such
as setoff or repossession or other self-help remedies provided in this Agreement
or any other Loan Document; or (3) to obtain provisional or ancillary remedies
such as replevin, injunctive relief, attachment, or appointment of a receiver
from a court having jurisdiction, before, during or after the pendency of any
arbitration proceeding, or (4) to defend or obtain injunctive or other equitable
relief from a court of competent jurisdiction against the foregoing or assert
mandatory counterclaims, if any, prior to and during the pendency of a
determination in arbitration of issues of performance, default, damages and
other such claims and disputes.
(b) Arbitration hereunder shall be before a three-person panel
of neutral arbitrators, consisting of one person from each of the following
categories: (1) an attorney who has practiced in the area of commercial real
estate law for at least ten (10) years; (2) a person with at least ten (10)
years' experience in real estate lending; and (3) a person with at least ten
(10) years' experience in the homebuilding industry. The AAA shall submit a list
of persons meeting the criteria outlined above for each category of arbitrator,
and the parties shall select one
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person from each category in the manner established by the AAA.
(c) In any dispute between the parties that is arbitratable
hereunder, where the aggregate of all claims and the aggregate of all
counterclaims is an amount less than Fifty Thousand And No/100ths Dollars
($50,000.00), the arbitration shall be before a single neutral arbitrator to be
selected in accordance with the Commercial Rules of the American Arbitration
Association and shall proceed under the Expedited Procedures of said Rules.
(d) In any arbitration hereunder, the arbitrators shall decide
(by documents only or with a hearing, at the arbitrators' discretion) any
pre-hearing motions which are substantially similar to pre-hearing motions to
dismiss for failure to state a claim or motions for summary adjudication.
(e) In any arbitration hereunder, discovery shall be permitted
in accordance with the Florida Rules of Civil Procedure. Scheduling of such
discovery may be determined by the arbitrators, and any discovery disputes shall
be finally determined by the arbitrators.
(f) The Florida Rules of Evidence shall control the admission
of evidence at the hearing in any arbitration conducted hereunder; provided,
however, no error by the arbitrators in application of the Rules of Evidence
shall be grounds, as such, for vacating the arbitrators' award.
(g) Notwithstanding any AAA rule to the contrary, the
arbitration award shall be in writing and shall specify the factual and legal
basis for the award, including findings of fact and conclusions of law.
(h) Each party shall each bear its own costs and expenses and
an equal share of the arbitrators' costs and administrative fees of arbitration.
12.14 CONSENT TO JURISDICTION. BORROWER AND EACH BANK HEREBY
IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA (NORTHERN DIVISION), OR ANY
FLORIDA STATE COURT IN PALM BEACH COUNTY, FLORIDA IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND BORROWER AND EACH BANK
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING IN THIS SECTION 12.14 SHALL LIMIT THE RIGHT OF AGENT
OR ANY BANK TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER
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JURISDICTION. SUBJECT TO THE PROVISIONS OF SECTION 12.13, UNLESS PROHIBITED BY
LAW, ANY JUDICIAL PROCEEDING BY BORROWER AGAINST AGENT OR ANY BANK OR ANY
AFFILIATE OF AGENT OR ANY BANK INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE
BROUGHT IN A COURT IN WEST PALM BEACH, FLORIDA.
12.15 WAIVER OF JURY TRIAL. BORROWER, AGENT AND EACH BANK HEREBY WAIVE
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.
12.16 CONFIDENTIALITY. Bank and Agent agree to use commercially
reasonable efforts to keep confidential any financial reports and other
information from time to time supplied to them by Borrower hereunder to the
extent that such information is not and does not become publicly available
through or with the consent or acquiescence of Borrower, except for disclosure
(i) to Agent and the other Banks or to a Transferee, (ii) to legal counsel,
accountants, and other professional advisors to a Bank, Agent or a Transferee,
(iii) to regulatory officials, (iv) to any Person as required by law,
regulation, or legal process, (v) to any Person in connection with any legal
proceeding to which that Bank is a party, and (vi) permitted by Section 15.4.
Any Bank or Agent disclosing such information shall use commercially reasonable
efforts to advise the Person to whom such information is disclosed of the
foregoing confidentiality agreement and to direct such Person to comply
therewith.
12.17 LIMIT ON INTEREST. Anything herein or in the Notes to the
contrary notwithstanding, the obligations of the Borrower under this Agreement
and the Notes to the Banks shall be subject to the limitation that payments of
interest to any Bank shall not be required to the extent that receipt of any
such payment by such Bank would be contrary to provisions of law applicable to
such Bank (if any) which limit the maximum rate of interest which may be charged
or collected by such Bank; PROVIDED, HOWEVER, that nothing herein shall be
construed to limit the Banks to presently existing maximum rates of interest, if
an increased interest rate is hereafter permitted by reason of applicable
federal or state legislation. In the event that the Borrower makes any payment
of interest, fees or other charges, however denominated, pursuant to this
Agreement or any of the Notes, which payment results in the interest paid by the
Borrower to any Bank to exceed the maximum rate of interest permitted by
applicable law, any excess over such maximum shall be applied in reduction of
the principal balance owed to such Bank as of the date of such payment, or if
such excess exceeds the amount of principal owed to such Bank as of the date of
such payment, the difference shall be paid by such Bank to the Borrower.
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ARTICLE XIII
AGENT
13.1 APPOINTMENT. SunTrust is hereby appointed Agent hereunder and
under each other Loan Document, and each of Banks irrevocably authorizes Agent
to act as the agent of such Bank. Agent agrees to act as such upon the express
conditions contained in this Article XIII. Agent shall not have a fiduciary
relationship in respect of Borrower, any Bank or the Issuing Bank by reason of
this Agreement.
13.2 POWERS. Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. Agent
shall have no implied duties to Banks, or any obligation to Banks to take any
action thereunder except any action specifically provided by the Loan Documents
to be taken by Agent. Agent shall have the sole and exclusive right to take any
actions or to give any notices relating to this Agreement pursuant to the
Indenture.
13.3 GENERAL IMMUNITY. Neither Agent (in its capacity as Agent and not
in its capacity as a Bank) nor any of its directors, officers, agents or
employees shall be liable to Borrower or any Bank for action taken or omitted to
be taken by it or them hereunder or under any other Loan Document or in
connection herewith or therewith except for its or their own gross negligence or
willful misconduct.
13.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither Agent nor any
of its directors, officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (i) any statement, warranty or
representation made in connection with any Loan Document or any borrowing or any
request for the issuance, amendment or extension of any Facility Letter of
Credit hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document or Reimbursement Agreement,
including, without limitation, any agreement by an obligor to furnish
information directly to each Bank; (iii) the satisfaction of any condition
specified in Article IV or V, except receipt of items required to be delivered
to Agent; or (iv) the validity, effectiveness or genuineness of any Loan
Document (including without limitation any Reimbursement Agreement) or any other
instrument or writing furnished in connection with any of the foregoing. Agent
shall have no duty to disclose to Banks information that is not required to be
furnished by Borrower to Agent at such time, but is voluntarily furnished by
Borrower to Agent (either in its capacity as Agent or in its individual
capacity).
13.5 ACTION ON INSTRUCTIONS OF BANKS. Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder and under any other
Loan Document in accordance with written instructions signed by the Majority
Banks (except as otherwise provided in Section
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11.2), and such instructions and any action taken or failure to act pursuant
thereto shall be binding on all of Banks and on all holders of Notes. Agent
shall be fully justified in failing or refusing to take any action hereunder and
under any other Loan Document unless it shall first be indemnified to its
satisfaction by Banks pro rata against any and all liability, cost and expense
that it may incur by reason of taking or continuing to take any such action.
13.6 EMPLOYMENT OF AGENTS AND COUNSEL. Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to Banks,
except as to money or securities or other Property received by it or its
authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Agent shall be entitled
to advice of counsel concerning all matters pertaining to the agency hereby
created and its duties hereunder and under any other Loan Document.
13.7 RELIANCE ON DOCUMENTS; COUNSEL. Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by Agent, which counsel may
be employees of Agent.
13.8 AGENT'S REIMBURSEMENT AND INDEMNIFICATION. Banks agree to
reimburse and indemnify Agent ratably in proportion to their respective
Commitments (i) for any amounts not reimbursed by Borrower for which Agent is
entitled to reimbursement by Borrower under the Loan Documents, (ii) for any
other "out of pocket" expenses incurred by Agent on behalf of Banks, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents, and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against Agent in any way relating to or arising out of
the Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Bank shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of Agent or for any fee payable to Agent pursuant to Section
2.5(a). The obligations of Banks under this Section 13.8 shall survive payment
of the Obligations and termination of this Agreement.
13.9 RIGHTS AS A BANK OR ISSUING BANK. In the event Agent is a Bank,
Agent shall have the same rights and powers hereunder and under any other Loan
Document as any Bank and may exercise the same as though it were not Agent, and
the term "Bank" or "Banks" shall, at any time when Agent is a Bank, unless the
context otherwise indicates, include Agent in its individual capacity. In the
event Agent is an Issuing Bank, Agent shall have the rights and powers of the
Issuing Bank hereunder and may exercise the same as though it were not Agent,
and the term "Issuing Bank" shall, at any time when Agent is the Issuing Bank,
unless the
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context otherwise indicates, include and mean Agent in its capacity as the
Issuing Bank. Agent may accept deposits from, lend money to, and generally
engage in any kind of trust, debt, equity or other transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with Borrower
or any of its Subsidiaries in which Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person.
13.10 BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon Agent or any other Bank and based on the
financial statements prepared by Borrower and Guarantors and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan Documents.
Each Bank also acknowledges that it will, independently and without reliance
upon Agent or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
13.11 SUCCESSOR AGENT. Agent may resign at any time by giving written
notice thereof to Banks and Borrower, such resignation to be effective upon the
appointment of a successor Agent or, if no successor Agent has been appointed,
sixty (60) days after the retiring Agent gives notice of its intention to
resign. Agent may be removed at any time with cause by written notice received
by Agent from the Majority Banks, such removal to be effective on the date
specified by such Banks. The consent of Borrower shall be required prior to any
removal of Agent becoming effective; provided, however, that if an Event of
Default has occurred and is continuing, the consent of Borrower shall not be
required. Upon any such resignation or removal, the Majority Banks shall have
the right to appoint, on behalf of Borrower and Banks, a successor Agent. Any
Bank can be a successor Agent upon the approval of the Majority Banks. Any other
successor Agent shall be appointed only with the prior reasonable consent of
Borrower. If no successor Agent shall have been so appointed by the Majority
Banks within forty-five (45) days after the resigning Agent's giving notice of
its intention to resign, then the resigning Agent may appoint, on behalf of
Borrower and Banks, a successor Agent. If Agent has resigned or been removed and
no successor Agent has been appointed, Banks may perform all the duties of Agent
hereunder and Borrower shall make all payments in respect of the Obligations to
the applicable Bank and for all other purposes shall deal directly with Banks.
No successor Agent shall be deemed to be appointed hereunder until such
successor Agent has accepted the appointment. Any such successor Agent shall be
a commercial bank having capital and retained earnings of at least
$250,000,000.00. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the resigning or
removed Agent. Upon the effectiveness of the resignation or the Loan Documents,
all amounts payable by Borrower under this Agreement shall be determined as if
such Bank had not sold such participating interests, and Borrower, Agent and the
Issuing Bank shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under the Loan Documents.
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13.12 AGENT'S FEE. Borrower agrees to pay to Agent, for its own
account, the fees agreed to by Borrower and Agent pursuant to that certain
commitment letter (including the letter agreement incorporated therein) between
them and SunTrust Equitable Securities Corporation dated March 9, 1998 (signed
and accepted by Borrower on March 11, 1998), or as otherwise agreed from time to
time.
ARTICLE XIV
SETOFF; RATABLE PAYMENTS
14.1 SETOFF. In addition to, and without limitation of, any rights of
any Bank or any Issuing Bank under applicable law, if Borrower becomes
insolvent, however evidenced, or any Event of Default occurs, any and all
deposits (including all account balances, whether provisional or final and
whether or not collected or available) and any other Indebtedness at any time
held or owing by any Bank or Issuing Bank to or for the credit or account of
Borrower may be offset and applied toward the payment of the Obligations owing
to such Bank or Issuing Bank, whether or not the Obligations, or any part
thereof, shall then be due.
14.2 RATABLE PAYMENTS. If any Bank (whether by setoff or otherwise) has
payment made to it upon its Loans in a greater proportion than that received by
any other Bank (other than payments received pursuant to Sections 3.1, 3.2 or
3.4 or other provisions of this Agreement that indicate that the payment is for
its account, such Bank agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Banks so that after such purchase each Bank will
hold its ratable proportion of Loans. If any Bank, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Bank agrees, promptly upon demand, to take such action
necessary such that all Banks share in the benefits of such collateral ratably
in proportion to their Loans. In case any such payment is prevented, restricted
or otherwise impeded by legal process, or otherwise, appropriate further
adjustments shall be made.
ARTICLE XV
BENEFIT OF AGREEMENT, ASSIGNMENTS; PARTICIPATIONS
15.1 SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of Borrower, Agent,
Banks and the Issuing Bank and their respective successors and assigns, except
that (i) Borrower shall not have the right to assign its rights or obligations
under the Loan Documents (except as otherwise permitted under Section 8.3), and
(ii) any assignment by any Bank must be made in compliance with Section 15.3.
Notwithstanding clause (ii) of this Section, any Bank may at any time, without
the consent of Borrower or Agent, assign all or any portion of its rights under
this Agreement and its Notes to a Federal Reserve Bank; provided, however, that
no such assignment shall release the transferor Bank from its obligations
hereunder. Agent may treat the payee of any Note as the owner thereof
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for all purposes hereof unless and until such payee complies with Section 15.3
in the case of an assignment thereof or, in the case of any other transfer, a
written notice of the transfer is filed with Agent. Any assignee or transferee
of a Note agrees by acceptance thereof to be bound by all the terms and
provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the holder of any Note, shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
15.2 PARTICIPATIONS.
15.2.1 PERMITTED PARTICIPANTS; EFFECT. Any Bank may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other Persons that are not, and that are not
Affiliates of a Person, in the home building business ("Participants")
participating interests in any Loan owing to such Bank, any Note held by such
Bank, any Commitment of such Bank or any other interest of such Bank under the
Loan Documents in an amount of not more than one half (1/2) of its Commitment,
so long as immediately following such sale the selling Bank shall retain at
least $10,000,000.00 of its Commitment (subject to reduction by Borrower
pursuant to Section 2.5 (d)). In the event of any such sale by a Bank of
participating interests to a Participant, such Bank's obligations under the Loan
Documents shall remain unchanged, such Bank shall remain solely responsible to
the other parties hereto for the performance of such obligations, such Bank
shall remain the holder of any such Note for all purposes under the Loan
Documents, all amounts payable by Borrower under this Agreement shall be
determined as if such Bank has not sold such participating interests, and
Borrower, Agent and the Issuing Bank shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under the
Loan Documents.
15.2.2 VOTING RIGHTS. Each Bank shall retain the sole right to
approve, and/or grant its consent to, without the consent of any Participant,
any amendment, modification or waiver or other matter relating to any provision
of the Loan Documents.
15.2.3 BENEFIT OF SETOFF. Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in Section 14.1
in respect of its participating interest in amounts owing under the Loan
Documents to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under the Loan Documents, provided that each Bank
shall retain the right of setoff provided in Section 14.1 with respect to the
amount of participating interests sold to each Participant. Banks agree to share
with each Participant, and each Participant, by exercising the right of setoff
provided in Section 14.1, agrees to share with each Bank, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 14.2 as if each Participant were a Lender.
15.3 ASSIGNMENTS.
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15.3.1 PERMITTED ASSIGNMENTS. Any Bank may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other financial institutions that are not, and that are
not Affiliates of a Person, in the home building business ("Purchasers") all or
any part of its rights and obligations under the Loan Documents in the amount of
not less than $10,000,000.00 (subject to reduction by Borrower pursuant to
Section 2.5(d) and if more than $10,000,000.00, then in minimum increments of
$10,000,000.00), provided that each such assignment shall be of a constant, and
not a varying, percentage of the assigning Bank's rights and obligations under
the Loan Documents; and provided further, that immediately following such
assignment, the assigning Bank either (i) shall retain a Commitment of not less
than $10,000,000.00 (subject to reduction by Borrower pursuant to Section 2.5
(d)), or (ii) shall have assigned all of its Commitment and have no remaining
interest in the Obligations. Before making or agreeing to make any such
assignment, the assigning Bank shall first offer to make the assignment to
SunTrust, which may accept or reject the offered assignment in whole or in part
in accordance with this Section 15.3, and then any balance not accepted by
SunTrust within ten (10) days after the Offer Notice (hereinafter defined) as
hereinafter provided shall be offered by the assigning Bank to the Banks other
than SunTrust (ratably in proportion to their Commitments), any and all of which
Banks may accept or reject the offered assignment in whole or in part in
accordance with this Section 15.3. Any offer to SunTrust or any other Bank
pursuant to the preceding sentence shall be at par as of the effective date of
the assignment without retention of fees or any profit margin or other
compensation by the assigning Bank, and notice of the offer (to SunTrust and, if
applicable, the other Banks) shall be given in writing by the assigning Bank in
accordance with Article XVI (the "Offer Notice"). SunTrust (and, if applicable,
the other Banks) shall be deemed to have rejected any assignment offered if they
do not confirm their agreement to accept the assignment by written notice given
to the assigning Bank (the "Acceptance Notice") within ten (10) days after
receiving the assigning Banks' Offer Notice. If SunTrust (or, if applicable, any
other Bank) agrees to accept the assignment described in an Offer Notice within
said ten (10) day period, then it and the assigning Bank shall close the
purchase and the assignment within ten (10) days after the giving of the
Acceptance Notice to the assigning Bank. Neither SunTrust nor any other Bank
shall ever be obligated to accept any assignment except to the extent set forth
in its Acceptance Notice, if any. Any assignment pursuant to this Section 15.3
shall be substantially in the form of EXHIBIT "I" hereto or in such other form
as may be agreed to by the parties thereto, subject to the limitations on the
terms of any assignment to SunTrust or any other Bank described above. The
consent of Borrower and Agent shall be required prior to an assignment becoming
effective, such consent not to be unreasonably withheld or delayed; provided,
however, that if an Event of Default has occurred and is continuing, the consent
of Borrower shall not be required.
15.3.2 EFFECT; EFFECTIVE DATE. Two (2) Business Days after (i)
delivery to Agent of a notice of assignment, substantially in the form attached
as EXHIBIT "1" to EXHIBIT "I" hereto (a "Notice of Assignment"), together with
any consents required by Section 15.3.1, and (ii) payment by the Bank of a
$3,000.00 fee to Agent for processing such assignment, such assignment shall
become effective on the effective date specified in such Notice of Assignment.
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<PAGE>
The Notice of Assignment shall contain a representation by the Purchaser to the
effect that none of the consideration used to make the purchase of the
Commitment and Loans under the applicable assignment agreement are "plan assets"
as defined under ERISA and that the rights and interests of the Purchaser in and
under the Loan Documents will not be "plan assets" under ERISA.
On and after the effective date of such assignment, such Purchaser
shall for all purposes be a Bank party to this Agreement and any other Loan
Document executed by Banks and shall have all the rights and obligations of a
Bank under the Loan Documents, to the same extent as if it were an original
party hereto, and no further consent or action by Borrower, Banks or Agent shall
be required to release the transferor Bank with respect to the percentage of the
Aggregate Commitment and Loans assigned to such Purchaser. Upon the consummation
of any assignment to a Purchaser pursuant to this Section 15.3.2, the transferor
Bank, Agent and Borrower shall make appropriate arrangements so that replacement
Notes are issued to such transferor Bank and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Commitment, as adjusted pursuant to such assignment.
15.4 DISSEMINATION OF INFORMATION. Borrower authorizes each Bank to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all public information in such Bank's possession
concerning the creditworthiness of Borrower, Guarantors and their Subsidiaries;
provided that each Transferee and prospective Transferee agrees to be bound by
Section 12.16 of this Agreement.
15.5 TAX TREATMENT. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Bank shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of Section 2.20.
ARTICLE XVI
NOTICES
16.1 GIVING NOTICE. Except as otherwise permitted by Section 2.14 with
respect to borrowing notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing and sent by a nationally recognized overnight courier, or by personal
delivery, or by registered or certified U.S. mail, postage prepaid and return
receipt requested, addressed or delivered to such party at its address set forth
below its signature hereto or at such other address as may be designated by such
party in a notice to the other parties. Any notice given in the manner set forth
herein shall be deemed given on the earlier of (i) one (1) Business Day after
sent by such overnight courier, (ii) the day of delivery, if sent by personal
delivery, or (iii) two (2) Business Days after deposit in the U.S. Mail in the
manner described above.
88
<PAGE>
16.2 CHANGE OF ADDRESS. Borrower, Agent, any Bank and the Issuing Bank
may each change the address for service of notice upon it by a notice in writing
to the other parties hereto.
ARTICLE XVII
COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by Borrower, Agent, and
Banks and each party has notified Agent by telex or telephone, that it has taken
such action.
IN WITNESS WHEREOF, Borrower, Banks, and Agent have executed this
Agreement as of the date first above written.
BORROWER:
ENGLE HOMES, INC., a Florida corporation
By:_________________________________________
Name: David Shapiro
Title: Vice President
(SEAL)
123 N.W. 13TH STREET, SUITE 300
BOCA RATON, FL 33432
____________________________________________
Attention: DAVID SHAPIRO, VICE PRESIDENT
COMMITMENTS
BANKS:
$45,000,000.00 SUNTRUST BANK, SOUTH FLORIDA,
NATIONAL ASSOCIATION
89
<PAGE>
By:_________________________________________
Name: Jeffrey I. Shulman
Title: Group Vice President
222 LAKEVIEW AVENUE, SUITE 305
WEST PALM BEACH, FL 33401
____________________________________________
Attention: Jeffrey I. Shulman, Group Vice
President
90
<PAGE>
$30,000,000.00 NATIONSBANK, N.A.
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
$25,000,000.00 GUARANTY FEDERAL BANK, FSB
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
$20,000,000.00 BANK ONE, ARIZONA, N.A.
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
91
<PAGE>
$20,000,000.00 BANKBOSTON, N.A.
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
$10,000,000.00 NORWEST BANK COLORADO, NATIONAL ASSOCIATION
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
$10,000,000.00 CREDIT LYONNAIS, ATLANTA AGENCY
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
92
<PAGE>
93
<PAGE>
$ 10,000,000.00 BANQUE PARIBAS
By:_________________________________________
Name:
Title:
____________________________________________
____________________________________________
____________________________________________
Attention: _________________________________
AGENT:
SUNTRUST BANK, SOUTH FLORIDA, NATIONAL
ASSOCIATION, a national banking association
By:_________________________________________
Name: Jeffrey I. Shulman
Title: Group Vice President
222 LAKEVIEW AVENUE, SUITE 305
WEST PALM BEACH, FL 33401
____________________________________________
Attention: JEFFREY I. SHULMAN, GROUP VICE
PRESIDENT
94
EXHIBIT 12.1
<TABLE>
<CAPTION>
ENGLE HOMES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
FISCAL YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Computation of historical ratios
Income from continuing operations $13,468 $8,495 $5,912 $7,575 $6,298
Add:
Provision for income taxes 8,431 5,206 3,624 4,604 3,820
Amortization of previously capitalized interest
included in cost of sales 16,066 11,543 6,904 7,712 4,129
Amortization of debt expense 373 456 792 942 678
------- ------- ------- ------- -------
Net income as adjusted 38,338 25,700 17,232 20,833 14,925
======= ======= ======= ======= =======
Fixed charges
Interest capitalized 15,623 15,272 13,750 7,183 4,068
Amortization of debt expense 373 456 792 942 678
------- ------- ------- ------- -------
$15,996 $15,728 $14,542 $8,125 $4,746
======= ======= ======= ======= =======
Ratio of earnings to fixed charges 2.40x 1.63x 1.18x 2.56x 3.14x
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED TWELVE MONTHS ENDED
APRIL 30, APRIL 30,
1998 1998
---- ----
<S> <C> <C>
Computation of historical ratios
Income from continuing operations $6,615 $14,169
Add:
Provision for income taxes 4,141 8,869
Amortization of previously capitalized interest
included in cost of sales 8,038 16,268
Amortization of debt expense 209 395
------- -------
Net income as adjusted 19,003 39,701
======= =======
Fixed charges
Interest capitalized 8,277 16,085
Amortization of debt expense 209 395
------- -------
$8,486 $16,480
======= =======
Ratio of earnings to fixed charges 2.24x 2.41x
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Engle Homes, Inc.
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated
November 10, 1997, relating to the consolidated financial statements and
schedule of Engle Homes, Inc. appearing in the Company's annual report on
Form 10-K/A for the year ended October 31, 1997.
We also consent to the reference to us under the captions "Selected Consolidated
Financial and Operating Data" and "Experts" in the Prospectus.
Miami, Florida BDO Seidman, LLP
July 14, 1998
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
----------
AMERICAN STOCK TRANSFER & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-3439945
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
40 Wall Street 10005
New York, New York (Zip Code)
(Address of trustee's
principal executive offices)
----------
ENGLE HOMES, INC.
(Exact name of obligor as specified in its charter)
FLORIDA 59-2214791
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
123 N.W. 13th Street
Boca Raton, Florida 33432
(Address of principal executive (Zip Code)
offices)
______________________________________________________________
9 1/4 % SERIES C SENIOR NOTES DUE 2008
(Title of the Indenture Securities)
<PAGE>
-2-
GENERAL
1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
a. Name and address of each examining or supervising authority
to which it is subject.
New York State Banking Department, Albany, New York
b. Whether it is authorized to exercise corporate trust
powers.
The Trustee is authorized to exercise corporate trust
powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.
If the obligor or any underwriter for the obligor is an
affiliate of the trustee, describe each such affiliation.
None.
3. VOTING SECURITIES OF THE TRUSTEE.
Furnish the following information as to each class of voting
securities of the trustee:
As of July 6, 1998
______________________________________________________________
COL. A COL. B
______________________________________________________________
Title of Class Amount Outstanding
______________________________________________________________
Common Shares - par value $600 per share. 1,000 shares
4. TRUSTEESHIPS UNDER OTHER INDENTURES.
American Stock Transfer & Trust Company is Trustee in respect
of:
a. certain 9 1/4 % Senior Notes due February 1, 2008 issued by
Engle Homes, Inc. under an Indenture dated as of February 2,
1998.
b. certain 9 1/4 % Series B Senior Notes due February 1, 2008
issued by Engle Homes, Inc. under an Indenture dated as of
June 12, 1998.
<PAGE>
-3-
5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE
OBLIGOR OR UNDERWRITERS.
None.
6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.
None.
7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR
THEIR OFFICIALS.
None.
8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.
None.
9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.
None.
10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF
CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
None.
11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A
PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF
THE OBLIGOR.
None.
12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
None.
13. DEFAULTS BY THE OBLIGOR.
None.
14. AFFILIATIONS WITH THE UNDERWRITERS.
None.
-4-
<PAGE>
15. Foreign Trustee.
Not applicable.
16. List of Exhibits.
T-l.1 - A copy of the Organization Certificate of American
Stock Transfer & Trust Company, as amended to date
including authority to commence business and
exercise trust powers was filed in connection with the
Registration Statement of Live Entertainment, Inc., File
No. 33-54654, and is incorporated herein by reference.
T-1.4 - A copy of the By-Laws of American Stock Transfer & Trust
Company, as amended to date was filed in connection with
the Registration Statement of Live Entertainment, Inc.,
File No. 33-54654, and is incorporated herein by
reference.
T-1.6 - The consent of the Trustee required by Section 312(b) of
the Trust Indenture Act of 1939. Exhibit A.
T-1.7 - A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority. - Exhibit B.
__________________________________
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, American Stock Transfer & Trust Company, a corporation
organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility and qualification to be
signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of New York, and State of New York, on the 7th day of July
1998.
AMERICAN STOCK TRANSFER
& TRUST COMPANY
Trustee
By: /s/ Herbert J. Lemmer
---------------------
Vice President
<PAGE>
EXHIBIT A
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321 (b) of the Trust Indenture
Act of 1939, and subject to the limitations therein contained, American
Stock Transfer & Trust Company hereby consents that reports of
examinations of said corporation by Federal, State, Territorial or
District authorities may be furnished by such authorities to you upon
request therefor.
Very truly yours,
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By: /s/ Herbert J. Lemmer
---------------------
Vice President
<PAGE>
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 WALL ST.
NEW YORK, NY 10005
EXHIBIT B
CONSOLIDATED REPORT OF CONDITION AND INCOME FOR A BANK WITH
DOMESTIC OFFICES ONLY AND TOTAL ASSETS OF LESS THAN $100 MILLION
REPORT AT CLOSE OF BUSINESS ON DECEMBER 31, 1997
All schedules are to be reported in thousands of dollars. Unless
otherwise indicated, report the amount outstanding as of the last
business day of the quarter.
<TABLE>
<CAPTION>
SCHEDULE RC - BALANCE SHEET
DOLLAR AMOUNTS IN THOUSANDS
-------------------------------------------------------------------------
<S> <C>
ASSETS
1. Cash and balances due from depository institutions: 135
a. Noninterest-bearing balances and currency and coin
b. Interest-bearing balances
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) 9,473
b. Available-for-sale securities (from Schedule RC-B, column D)
3. Federal funds sold and securities purchased under agreements to resell
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C)
b. LESS: Allowance for loan and lease losses
c. LESS: Allocated transfer risk reserve
d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a
minus 4.b and 4.c
5. Trading assets
6. Premises and fixed assets (including capitalized leases) 3,626
7. Other real estate owned (from Schedule RC-M)
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M)
9. Customers' liability to this bank on acceptances outstanding
10. Intangible assets (from Schedule RC-M)
11. Other asssets (from Schedule RC-F) 6,068
12. a. Total assets (sum of items 1 through 11) 19,320
b. Losses deferred pursuant to 12 U.S.C. 1823 (j)
c. Total assets and losses deferred pursuant to 12 U.S.C. 1823 (j) (sum of
items 12.a and 12.b) 19,320
<PAGE>
SCHEDULE RC - CONTINUED
DOLLAR AMOUNTS IN THOUSANDS
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E)
(1)Noninterest-bearing
(2)Interest-bearing
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(1)Noninterest-bearing
(2)Interest-bearing
14. Federal funds purchased and securities sold under agreements to repurchase
15. a. Demand notes issued to the U.S. Treasury
b. Trading liabilities
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
a. With a remaining maturity of one year or less
b. With a remaining maturity of more than one year through three years
c. With a remaining maturity of more than three years
17. Not applicable
18. Bank's liability on acceptances executed and outstanding
19. Subordinated notes and debentures
20. Other liabilities (from Schedule RC-G) 8,226
21. Total liabilities (sum of items 13 through 20) 8,2Z6
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus
24. Common stock 600
25. Surplus (exclude all surplus related to preferred stock) 9,289
26. a. Undivided profits and capital reserves 1,205
b. Net unrealized holding gains (losses) on available-for-sale securities
27. Cumulative foreign currency translation adjustments
28. a. Total equity capital (sum of items 23 through 27) 11,094
b. Losses deferred pursuant to 12 U.S.C. 1823(j)
c. Total equity capital and losses deferred pursuant to 12 U.S.C. 1823(j)
(sum of items 28.a and 28.b) 11,094
29. Total liabilities, equity capital, and losses deferred pursuant to
12 U.S.C. 1823 (j) (sum of items 21 and 28.c) 19,320
</TABLE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
ENGLE HOMES, INC.
OFFER TO EXCHANGE ITS
9 1/4% SERIES C SENIOR NOTES DUE 2008
FOR ANY AND ALL OF ITS OUTSTANDING
9 1/4% SENIOR NOTES DUE 2008 AND
9 1/4% SERIES B SENIOR NOTES DUE 2008
PURSUANT TO THE PROSPECTUS DATED ________________, 1998 THE EXCHANGE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
________________, 1998, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
BY REGISTERED OR CERTIFIED MAIL, OVERNIGHT COURIER OR HAND DELIVERY:
40 WALL STREET
NEW YORK, NEW YORK 10005
ATTENTION: EXCHANGE DEPARTMENT
FACSIMILE TRANSMISSIONS TO CONFIRM BY TELEPHONE
(ELIGIBLE INSTITUTIONS ONLY): OR FOR INFORMATION CALL:
(718) 234-5001 (718) 921-8200
---------------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned hereby acknowledges receipt and review of the
Prospectus, dated , 1998, of Engle Homes, Inc., a Florida corporation (the
"Company"), and this Letter of Transmittal (the "Letter of Transmittal"), which
together describe the Company's offer (the "Exchange Offer") to exchange its 9
1/4% Series C Senior Notes (the "Exchange Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a Registration Statement of which the Prospectus is a part, for a like principal
amount of its issued and outstanding 9 1/4% Senior Notes due 2008 and its 9 1/4%
Series B Senior Notes due 2008 (collectively, the "Old Notes"). Capitalized
terms used but not defined herein shall have the same meaning given them in the
Prospectus.
This Letter of Transmittal is to be completed either if (a)
certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth under "The
Exchange Offer -- Procedures for Tendering Old Notes" in the Prospectus and an
Agent's Message (as defined below) is not delivered. Certificates, or book-entry
confirmation of a book-entry transfer of such Old Notes into the Exchange
Agent's account at The Depository Trust Company ("DTC"), as well as this Letter
of Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, and any other documents required by this
Letter of Transmittal, must be received by the Exchange Agent at its address set
forth herein on or prior to the Expiration Date. Tenders by book-entry transfer
may also be made by delivering an Agent's Message in lieu of this Letter of
Transmittal. The term "book-entry confirmation" means a confirmation of a
book-entry transfer of Old Notes into the Exchange Agent's account at DTC. The
term "Agent's Message" means a message, transmitted by DTC to and received by
the Exchange Agent and forming a part of a book-entry confirmation, which states
that DTC has received an express acknowledgment from the tendering participant,
which acknowledgment states that such participant has received and agrees to be
bound by this Letter of Transmittal and that the Company may enforce this Letter
of Transmittal against such participant.
Holders (as defined below) of Old Notes whose certificates (the
"Certificates") for such Old Notes are not immediately available or who cannot
deliver their Certificates and all other required documents to the Exchange
Agent on or prior to the Expiration Date (as defined in the Prospectus) or who
cannot complete the procedures for book-entry transfer on a timely basis, must
tender their Old Notes according to the guaranteed delivery procedures set forth
in "The Exchange Offer -- Procedures for Tendering Old Notes" in the Prospectus.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
ALL TENDERING HOLDERS COMPLETE THIS BOX:
<TABLE>
<CAPTION>
DESCRIPTION OF OLD NOTES
OLD NOTES
IF BLANK, PRINT NAME AND ADDRESS OF REGISTERED HOLDER(S) (ATTACH ADDITIONAL LIST IF NECESSARY)
- -------------------------------------------------------- ----------------------------------------------------------
AGGREGATE PRINCIPAL AMOUNT OF
CERTIFICATE PRINCIPAL AMOUNT OF OLD NOTES TENDERED
NUMBER(S)* OF OLD NOTES (IF LESS THAN ALL)**
----------- ---------------- ---------------------
<S> <C> <C> <C>
----------- ---------------- ---------------------
----------- ---------------- ---------------------
----------- ---------------- ---------------------
----------- ---------------- ---------------------
----------- ---------------- ---------------------
<FN>
* Need not be completed by book-entry Holders.
** Old Notes may be tendered in whole or in part in multiples of $1,000. All Old Notes held shall be deemed
tendered unless a lesser number is specified in this column. See Instructions 4.
</FN>
</TABLE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution___________________________________________________
DTC Account Number______________________Transaction Code Number_________________
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING
(SEE INSTRUCTION 1):
Name(s) of Registered Holder(s)_________________________________________________
Window Ticket Number (if any)___________________________________________________
Date of Execution of Notice of Guaranteed Delivery______________________________
Name of Institution which Guaranteed Delivery___________________________________
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution___________________________________________________
DTC Account Number______________________Transaction Code Number_________________
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD NOTES
ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR ITS
OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:___________________________________________________________________________
Address:________________________________________________________________________
2
<PAGE>
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to the Company for exchange the principal amount of
Old Notes indicated above. Subject to and effective upon the acceptance for
exchange of all or any portion of the Old Notes tendered herewith in accordance
with the terms and conditions of the Exchange Offer (including, if the Exchange
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to such Old Notes as
are being tendered herewith. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent as its agent and attorney-in-fact (with full
knowledge that the Exchange Agent is also acting as agent of the Company in
connection with the Exchange Offer) with respect to the tendered Old Notes, with
full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest) subject only to the right of
withdrawal described in the Prospectus, to (i) deliver Certificates for Old
Notes to the Company together with all accompanying evidences of transfer and
authenticity to, or upon the order of, the Company, upon receipt by the Exchange
Agent, as the undersigned's agent, of the Exchange Notes to be issued in
exchange for such Old Notes, (ii) present Certificates for such Old Notes for
transfer, and to transfer the Old Notes on the books of the Company, and (iii)
receive for the account of the Company all benefits and otherwise exercise all
rights of beneficial ownership of such Old Notes, all in accordance with the
terms and conditions of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, sell, assign and transfer the Old
Notes tendered hereby and that, when the same are accepted for exchange, the
Company will acquire good, marketable and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances, and that the Old
Notes tendered hereby are not subject to any adverse claims or proxies. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Company or the Exchange Agent to be necessary or desirable to
complete the exchange, assignment and transfer of the Old Notes tendered hereby,
and the undersigned will comply with its obligations under the Registration
Rights Agreement. The undersigned has read and agrees to all of the terms of the
Exchange Offer.
The name(s) and address(es) of the registered Holder(s) of the Old
Notes tendered hereby should be printed above, if they are not already set forth
above, as they appear on the Certificates representing such Old Notes. The
Certificate number(s) and the Old Notes that the undersigned wishes to tender
should be indicated in the appropriate boxes above.
If any tendered Old Notes are not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Old Notes than
are tendered or accepted for exchange, Certificates for such nonexchanged or
nontendered Old Notes will be returned (or, in the case of Old Notes tendered by
book-entry transfer, such Old Notes will be credited to an account maintained at
DTC), without expense to the tendering Holder, promptly following the expiration
or termination of the Exchange Offer.
The undersigned understands that tenders of Old Notes pursuant to any
one of the procedures described in "The Exchange Offer--Procedures for Tendering
Old Notes" in the Prospectus and in the instructions attached hereto will, upon
the Company's acceptance for exchange of such tendered Old Notes, constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer. The undersigned recognizes
that, under certain circumstances set forth in the Prospectus, the Company may
not be required to accept for exchange any of the Old Notes tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of Old Notes, that such Exchange Notes be credited to the account
indicated above maintained at DTC. If applicable, substitute Certificates
representing Old Notes not exchanged or not accepted for exchange will be issued
to the undersigned or, in the case of a book-entry transfer of Old Notes, will
be credited to the account indicated above maintained at DTC. Similarly, unless
otherwise indicated under "Special Delivery Instructions," please deliver
Exchange Notes to the undersigned at the address shown below the undersigned's
signature.
By tendering Notes and executing this Letter of Transmittal or
effecting delivery of an Agent's Message in lieu thereof, the undersigned hereby
acknowledge(s) that this Exchange Offer is being made in reliance upon
interpretations contained in no-action letters issued to third parties by the
staff of the Securities and Exchange Commission (the "SEC"), including Exxon
Capital Holdings Corporation, SEC No-Action Letter (available April 13, 1989),
Morgan Stanley & Co. Inc., SEC No-Action Letter (available June 5, 1991) (the
"Morgan Stanley Letter") and Mary Kay Cosmetics, Inc., SEC No-Action Letter
(available June 5, 1991), that the Exchange Notes
3
<PAGE>
issued in exchange for the Private Notes pursuant to the Exchange Offer may be
offered for resale, resold and otherwise transferred by holders thereof (other
than (i) a broker-dealer who purchased Private Notes exchanged for such Exchange
Notes directly from the Company to resell pursuant to Rule 144A or any other
available exemption under the Securities Act or (ii) any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such Exchange Notes are acquired
in the ordinary course of such holders' business and such holders are not
participating in, and have no arrangement with any person to participate in, the
distribution of such Exchange Notes. The undersigned specifically represent(s)
to the Company that (i) any Exchange Notes acquired in exchange for Private
Notes tendered hereby are being acquired in the ordinary course of business of
the person receiving such Exchange Notes, (ii) the undersigned is not
participating in, and has no arrangement with any person to participate in, the
distribution of such Exchange Notes, and (iii) neither the undersigned nor any
such other person is an "affiliate" (as defined in Rule 405 under the Securities
Act) of the Company or a broker-dealer tendering Private Notes acquired directly
from the Company for its own account.
If the undersigned or the person receiving the Exchange Notes is a
broker-dealer that is receiving Exchange Notes in exchange for Private Notes for
its own account pursuant to the Exchange Offer, the undersigned acknowledges
that it or such other person will deliver a prospectus in connection with any
resale of such Exchange Notes. The undersigned acknowledges that if the
undersigned is participating in the Exchange Offer for the purpose of
distributing the Exchange Notes received in exchange for the Private Notes (i)
the undersigned cannot rely on the position of the staff of the SEC in the
Morgan Stanley Letter and similar SEC no-action letters, and, in the absence of
an exemption therefrom, must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction of such Exchange Notes, in which case the registration
statement must contain the selling security holder information required by Item
507 or Item 508, as applicable, of Regulation S-K of the SEC, and (ii) a broker-
dealer that delivers such a prospectus to purchasers in connection with such
resales will be subject to certain of the civil liability provisions under the
Securities Act and will be bound by the provisions of the Registration Rights
Agreement (including certain indemnification rights and obligations).
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
herein conferred or agreed to be conferred in this Letter of Transmittal shall
survive the death or incapacity of the undersigned and any obligation of the
undersigned hereunder shall be binding upon the heirs, executors,
administrators, personal representatives, trustees in bankruptcy, legal
representatives, successors and assigns of the undersigned. Except as stated in
the Prospectus, this tender is irrevocable.
The undersigned, by completing the box entitled "Description of Old
Notes" above and signing this letter, will be deemed to have tendered the Old
Notes as set forth in such box.
4
<PAGE>
HOLDER(S) SIGN HERE
(SEE INSTRUCTIONS 2, 5 AND 6)
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE 11)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED
BY INSTRUCTION 2)
This Letter of Transmittal must be signed by registered Holder(s)
exactly as name(s) appear(s) on Certificate(s) for the Old Notes hereby tendered
or on the register of Holders maintained by the Company, or by any person(s)
authorized to become the registered Holder(s) by endorsements and documents
transmitted herewith (including such opinions of counsel, certifications and
other information as may be required by the Company or the Trustee for the Old
Notes to comply with the restrictions on transfer applicable to the Old Notes).
If signature is by an attorney-in-fact, executor, administrator, trustee,
guardian, officer of a corporation or another acting in a fiduciary capacity or
representative capacity, please set forth the signer's full title. See
Instruction 5.
________________________________________________________________________________
________________________________________________________________________________
(SIGNATURE(S) OF HOLDER(S))
Date: ______________, 1998
Name(s)_________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (full title)___________________________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number__________________________________________________
Tax Identification of Social Security Number(s)_________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED, SEE INSTRUCTIONS 2 AND 5)
________________________________________________________________________________
(AUTHORIZED SIGNATURE)
Date: ___________, 1998
Name of Firm____________________________________________________________________
Capacity (full title)___________________________________________________________
(PLEASE PRINT)
Address_________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number__________________________________________________
5
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if Exchange Notes or Old Notes not tendered are to
be issued in the name of someone other than the registered Holder of the Old
Notes whose name(s) appear(s) above.
Issue
[ ] Old Notes not tendered to:
[ ] Exchange Notes to:
Name(s)_________________________________________________________________________
Address_________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number__________________________________________________
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if Exchange Notes or Old Notes not tendered are to
be sent to someone other than the registered Holder of the Old Notes whose
name(s) appear(s) above, or such registered Holder(s) at an address other than
that shown above.
Mail
[ ] Old Notes not tendered to:
[ ] Exchange Notes to:
Name(s)_________________________________________________________________________
Address_________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number__________________________________________________
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offer -- Procedures for Tendering Old Notes" in the Prospectus and an Agent's
Message is not delivered. Certificates, or timely confirmation of a book-entry
transfer of such Old Notes into the Exchange Agent's account at DTC, as well as
this Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to the Expiration Date. Tenders by
book-entry transfer may also be made by delivering an Agent's Message in lieu
thereof. Old Notes may be tendered in whole or in part in integral multiples of
$1,000.
Holders who wish to tender their Old Notes and (i) whose Old Notes are
not immediately available or (ii) who cannot deliver their Old Notes, this
Letter of Transmittal and all other required documents to the Exchange Agent on
or prior to the Expiration Date or (iii) who cannot complete the procedures for
delivery by book-entry transfer on a timely basis, may tender their Old Notes by
properly completing and duly executing a Notice of Guaranteed Delivery pursuant
to the guaranteed delivery procedures set forth in "The Exchange Offer --
Procedures for Tendering Old Notes" in the Prospectus. Pursuant to such
procedures: (i) such tender must be made by or through an Eligible Institution
(as defined below); (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the Company,
must be received by the Exchange Agent on or prior to the Expiration Date; and
(iii) the Certificates (or a book-entry confirmation) representing all tendered
Old Notes, in proper form for transfer, together with a Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, with any required
signature guarantees and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent within three New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in "The Exchange Offer -- Procedures for Tendering Old
Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile or mail to the Exchange Agent, and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery. For Old Notes to be properly tendered pursuant to the
guaranteed delivery procedure, the Exchange Agent must receive a Notice of
Guaranteed Delivery on or prior to the Expiration Date. As used herein and in
the Prospectus, "Eligible Institution" means a firm or other entity identified
in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein) (i) a bank; (ii) a broker, dealer,
municipal securities broker or dealer or government securities broker or dealer;
(iii) a credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering Holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered
Holder (which term, for purposes of this document, shall include any
participant in DTC whose name appears on a security position listing as
the owner of the Old Notes (the "Holder")) of Old Notes tendered
herewith, unless such Holder(s) has completed either the box entitled
"Special Issuance Instructions" or the box entitled "Special Delivery
7
<PAGE>
Instructions" above, or
(ii) such Old Notes are tendered for the account of a firm
that is an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the
signature(s) on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Old Notes" is inadequate, the Certificate number(s) and/or the
principal amount of Old Notes and any other required information should be
listed on a separate signed schedule which is attached to this Letter of
Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Notes will be
accepted only in integral multiples of $1,000. If less than all the Old Notes
evidenced by any Certificate submitted are to be tendered, fill in the principal
amount of Old Notes which are to be tendered in the box entitled "Principal
Amount of Old Notes Tendered." In such case, new Certificate(s) for the
remainder of the Old Notes that were evidenced by your old Certificate(s) will
only be sent to the Holder of the Old Note, promptly after the Expiration Date.
All Old Notes represented by Certificates delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Old Notes may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written, telegraphic or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth above or in the Prospectus
on or prior to the Expiration Date. Any such notice of withdrawal must specify
the name of the person who tendered the Old Notes to be withdrawn, the aggregate
principal amount of Old Notes to be withdrawn, and (if Certificates for Old
Notes have been tendered) the name of the registered Holder of the Old Notes as
set forth on the Certificate for the Old Notes, if different from that of the
person who tendered such Original Notes. If Certificates for the Old Notes have
been delivered or otherwise identified to the Exchange Agent, then prior to the
physical release of such Certificates for the Old Notes, the tendering Holder
must submit the serial numbers shown on the particular Certificates for the Old
Notes to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution, except in the case of Old Notes tendered
for the account of an Eligible Institution. If Old Notes have been tendered
pursuant to the procedures for book-entry transfer set forth in the Prospectus
under "The Exchange Offer -- Procedures for Tendering Old Notes," the notice of
withdrawal must specify the name and number of the account at DTC to be credited
with the withdrawal of Old Notes, in which case a notice of withdrawal will be
effective if delivered to the Exchange Agent by written, telegraphic, telex or
facsimile transmission. Withdrawals of tenders of Old Notes may not be
rescinded. Old Notes properly withdrawn will not be deemed validly tendered for
purposes of the Exchange Offer, but may be retendered at any subsequent time on
or prior to the Expiration Date by following any of the procedures described in
the Prospectus under "The Exchange Offer -- Procedures for Tendering Old Notes."
All questions as to the validity, form and eligibility (including time
of receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
The Company, any affiliates or assigns of the Company, the Exchange Agent or any
other person shall not be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Old Notes which have been tendered but which are
withdrawn will be returned to the Holder thereof without cost to such Holder
promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered Holder(s) of the Old
Notes tendered hereby, the signature(s) must correspond exactly with the name(s)
as written on the face of the Certificate(s) without alteration, enlargement or
any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Old Notes are registered in different name(s) on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.
8
<PAGE>
If this Letter of Transmittal or any Certificates or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Company, must submit proper evidence satisfactory to the Company, in its sole
discretion, of each such person's authority so to act.
When this Letter of Transmittal is signed by the registered owner(s) of
the Original Notes listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) are required unless Exchange Notes are
to be issued in the name of a person other than the registered Holder(s).
Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Old Notes listed, the Certificates must be endorsed
or accompanied by appropriate bond powers, signed exactly as the name or names
of the registered owner(s) appear(s) on the Certificates, and also must be
accompanied by such opinions of counsel, certifications and other information as
the Company or the Trustee for the Old Notes may require in accordance with the
restrictions on transfer applicable to the Old Notes. Signatures on such
Certificates or bond powers must be guaranteed by an Eligible Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Notes are to
be issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Notes are to be sent to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Old Notes not exchanged will be returned by mail or, if
tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The Company will determine, in its sole discretion,
all questions as to the form of documents, validity, eligibility (including time
of receipt) and acceptance for exchange of any tender of Old Notes, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for which, may, in the view
of counsel to the Company be unlawful. The Company also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange Offer -- Conditions to the
Exchange Offer" or any conditions or irregularity in any tender of Old Notes of
any particular Holder whether or not similar conditions or irregularities are
waived in the case of other Holders. The Company's interpretation of the terms
and conditions of the Exchange Offer (including this Letter of Transmittal and
the instructions hereto) will be final and binding. No tender of Old Notes will
be deemed to have been validly made until all irregularities with respect to
such tender have been cured or waived. The Company, any affiliates or assigns of
the Company, the Exchange Agent, or any other person shall not be under any duty
to give notification of any irregularities in tenders or incur any liability for
failure to give such notification.
8. QUESTIONS, REQUESTS FOR THE ASSISTANCE AND ADDITIONAL COPIES.
Questions and requests for assistance may be directed to the Exchange Agent at
its address and telephone number set forth on the front of this Letter of
Transmittal. Additional copies of the Prospectus, the Notice of Guaranteed
Delivery and the Letter of Transmittal may be obtained from the Exchange Agent
or from your broker, dealer, commercial bank, trust company or other nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under the U.S. Federal
income tax law, a Holder whose tendered Old Notes are accepted for exchange is
required to provide the Exchange Agent with such Holder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Exchange
Agent is not provided with the correct TIN, the Internal Revenue Service (the
"IRS") may subject the Holder or other payee to a $50 penalty. In addition,
payments to such Holders or other payees with respect to Old Notes exchanged
pursuant to the Exchange Offer may be subject to 31% backup withholding.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering Holder has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 3 is checked, the
Holder or other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60-day period following the date of the Substitute Form W-9.
If the Holder
9
<PAGE>
furnishes the Exchange Agent with its TIN within 60 days after the date of the
Substitute Form W-9, the amounts retained during the 60-day period will be
remitted to the Holder and no further amounts shall be retained or withheld from
payments made to the Holder thereafter. If, however, the Holder has not provided
the Exchange Agent with its TIN within such 60-day period, amounts withheld will
be remitted to the IRS as backup withholding. In addition, 31% of all payments
made thereafter will be withheld and remitted to the IRS until a correct TIN is
provided.
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Old Notes or of the last transferee appearing on the transfers attached to,
or endorsed on, the Old Notes. If the Old Notes are registered in more than one
name or are not in the name of the actual owner, consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.
Certain Holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to these backup
withholding and reporting requirements. Such Holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that Holder's exempt status.
Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
Holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax.
Rather, the U.S. Federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
waive satisfaction of any or all conditions enumerated in the Prospectus.
11. NO CONDITIONAL TENDERS. No alternative, conditional or contingent
tenders will be accepted. All tendering Holders of Old Notes, by execution of
this Letter of Transmittal, shall waive any right to receive notice of the
acceptance of Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is
obligated to give notice of any defect or irregularity with respect to any
tender of Old Notes nor shall any of them incur any liability for failure to
give any such notice.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Old Notes have been lost, destroyed or stolen, the Holder should
promptly notify the Exchange Agent. The Holder will then be instructed as to the
steps that must be taken in order to replace the Certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Certificate(s) have been followed.
13. SECURITY TRANSFER TAXES. Holders who tender their Old Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, Exchange Notes are to be delivered to, or are to be
issued in the name of, any person other than the registered Holder of the Old
Notes tendered, or if a transfer tax is imposed for any reason other than the
exchange of Old Notes in connection with the Exchange Offer, then the amount of
any such transfer tax (whether imposed on the registered Holder or any other
persons) will be payable by the tendering Holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering Holder.
10
<PAGE>
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE
THEREOF) AND ALL OTHER REQUIRED DOCUMENTS MUST BE
RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO
THE EXPIRATION DATE. TO BE COMPLETED BY
ALL TENDERING SECURITYHOLDERS
(SEE INSTRUCTION 9)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: AMERICAN STOCK TRANSFER AND TRUST COMPANY
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE FORM W-9 PART 1 - PLEASE PROVIDE YOUR TIN ON THE LINE AT RIGHT Social Security Number
AND CERTIFY BY SIGNING AND DATING BELOW
OR
Employer Identification
Number
- -------------------------------------------------------------------------------------------------------------------
DEPARTMENT OF THE PART 2 - Part 3
TREASURY, INTERNAL REVENUE CERTIFICATION -- Under the Penalties of Perjury, I Check if TIN Applied For [ ]
SERVICE certify that: (1) The number shown on this form
is my correct taxpayer identification number (or
I am waiting for a number to be issued to me),
(2) I am not subject to backup withholding either
because (i) I am exempt from backup withholding,
(ii) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to
backup withholding as a result of a failure to
report all interest or dividends, or (iii) the
IRS has notified me that I am no longer subject
to backup withholding, and (3) any other
information provided on this form is true and
correct.
- -------------------------------------------------------------------------------------------------------------------
PAYOR'S REQUEST FOR TAXPAYER You must cross out item (iii) in Part (2) above if
IDENTIFICATION NUMBER you have been notified by the IRS that you are subject to
("TIN") AND CERTIFICATION backup withholding because of underreporting interest or
dividends on your tax return and you have not been notified by
the IRS that you are no longer subject to backup withholding.
SIGNATURE _________________________________ DATE __________, 1998
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES
RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT
TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all payments made to me on account of the Exchange Notes shall be retained
until I provide a taxpayer identification number to the Exchange Agent and that,
if I do not provide my taxpayer identification number within 60 days, such
retained amounts shall be remitted to the Internal Revenue Service as backup
withholding and 31% of all reportable payments made to me thereafter will be
withheld and remitted to the Internal Revenue Service until I provide a taxpayer
identification number.
SIGNATURE _________________________________________ DATE ________________, 1998
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
ENGLE HOMES, INC.
OFFER TO EXCHANGE ITS
9 1/4% SERIES C SENIOR NOTES DUE 2008
FOR ANY AND ALL OF ITS OUTSTANDING
9 1/4% SENIOR NOTES DUE 2008 AND
9 1/4% SERIES B SENIOR NOTES DUE 2008
PURSUANT TO THE PROSPECTUS DATED __________________, 1998
This Notice of Guaranteed Delivery, or one substantially equivalent to
this form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's 9 1/4% Senior Notes due 2008 and/or 9 1/4% Series
B Senior Notes due 2008 (collectively, the "Old Notes") are not immediately
available, (ii) Old Notes, the Letter of Transmittal and all other required
documents cannot be delivered to American Stock Transfer & Trust Company (the
"Exchange Agent") on or prior to the Expiration Date or (iii) the procedures for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand, overnight courier or
mail, or transmitted by facsimile transmission, to the Exchange Agent. See "The
Exchange Offer -- Procedures for Tendering Old Notes" in the Prospectus. In
addition, in order to utilize the guaranteed delivery procedure to tender Old
Notes pursuant to the Exchange Offer, a completed, signed and dated Letter of
Transmittal relating to the Old Notes (or facsimile thereof) must also be
received by the Exchange Agent on or prior to the Expiration Date. Capitalized
terms not defined herein have the meanings assigned to them in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
BY REGISTERED OR CERTIFIED MAIL, OVERNIGHT COURIER OR HAND DELIVERY:
40 WALL STREET
NEW YORK, NEW YORK 10005
ATTENTION: EXCHANGE DEPARTMENT
FACSIMILE TRANSMISSIONS TO CONFIRM BY TELEPHONE
(ELIGIBLE INSTITUTIONS ONLY): OR FOR INFORMATION CALL:
(718) 234-5001 (718) 921-8200
---------------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Engle Homes, Inc., a Florida
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Prospectus dated ________________, 1998 (as the same may be amended
or supplemented from time to time, the "Prospectus"), and the related Letter of
Transmittal (which together constitute the "Exchange Offer"), receipt of which
is hereby acknowledged, the aggregate principal amount of Old Notes set forth
below pursuant to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offer -- Procedures for Tendering Old Notes."
Aggregate Principal Amount Name(s) of Registered Holder(s):________
Amount Tendered: $_________________*
________________________________________
Certificate No(s) (if
available): ____________________________________________________________________
________________________________________________________________________________
$ ______________________________________________________________________________
(Total Principal Amount Represented by Old Notes Certificate(s))
If Old Notes will be tendered by book-entry transfer, provide the following
information:
DTC Account Number: ____________________________________________________________
Date: __________________________________________________________________________
* Must be in integral multiples of $1,000.
________________________________________________________________________________
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.
________________________________________________________________________________
PLEASE SIGN HERE
X _______________________________________ ___________________________________
X _______________________________________ ___________________________________
Signature(s) of Owner(s) or Date
Authorized Signatory
Area Code and Telephone Number:____________________________________
Must be signed by the holder(s) of the Old Notes as their name(s)
appear(s) on certificates for Old Notes or on a security position listing, or by
person(s) authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below and, unless waived by the Company, provide
proper evidence satisfactory to the Company of such person's authority to so
act.
2
<PAGE>
Please print name(s) and address(es)
Name(s): ___________________________________________________________
___________________________________________________________
___________________________________________________________
___________________________________________________________
Capacity: ___________________________________________________________
Address(es): ___________________________________________________________
___________________________________________________________
___________________________________________________________
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, government securities broker or
government securities dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association (each of
the foregoing being referred to as an "Eligible Institution"), hereby guarantees
to deliver to the Exchange Agent, at one of its addresses set forth above,
either the Old Notes tendered hereby in proper form for transfer, or
confirmation of the book-entry transfer of such Old Notes to the Exchange
Agent's account at The Depository Trust Company ("DTC"), pursuant to the
procedures for book-entry transfer set forth in the Prospectus, in either case
together with one or more properly completed and duly executed Letter(s) of
Transmittal (or facsimile thereof) and any other required documents within three
New York Stock Exchange trading days after the date of execution of this Notice
of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal (or facsimile thereof) and the Old Notes tendered hereby to the
Exchange Agent within the time period set forth above and that failure to do so
could result in a financial loss to the undersigned.
___________________________________ _____________________________________
Name of Firm Authorized Signature
___________________________________ _____________________________________
Address Title
___________________________________ _____________________________________
Zip Code (Please Type or Print)
Area Code and Telephone No. _________________________ Dated: ______________
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES FOR
ORIGINAL NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
EXHIBIT 99.3
ENGLE HOMES, INC.
LETTER TO REGISTERED HOLDERS AND
DEPOSITORY TRUST COMPANY PARTICIPANTS
FOR
OFFER TO EXCHANGE ITS
9 1/4% SERIES C SENIOR NOTES DUE 2008
FOR ANY AND ALL OF ITS OUTSTANDING
9 1/4% SENIOR NOTES DUE 2008 AND
9 1/4% SERIES B SENIOR NOTES DUE 2008
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 1998, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
To Registered Holders and Depository Trust Company Participants:
We are enclosing herewith the material listed below relating to the
offer by Engle Homes, Inc., a Florida corporation (the "Company"), to exchange
its 9 1/4% Series C Senior Notes due 2008 (the "Exchange Notes"), which have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), for a like principal amount of its issued and outstanding 9 1/4% Senior
Notes due 2008 and 9 1/4% Series B Senior Notes due 2008 (collectively, the "Old
Notes") upon the terms and subject to the conditions set forth in the Company's
Prospectus, dated , 1998, and the related Letter of Transmittal (which together
constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated , 1998;
2. Letter of Transmittal (together with accompanying
Substitute Form W-9 Guidelines);
3. Notice of Guaranteed Delivery;
4. Letter which may be sent to your clients for whose account
you hold Old Notes in your name or in the name of your nominee; and
5. Letter which may be sent from your clients to you with such
client's instruction with regard to the Exchange Offer.
We urge you to contact your clients promptly. Please note that the
Exchange Offer will expire on the Expiration Date unless extended.
The Exchange Offer is not conditioned upon any minimum number of Old
Notes being tendered.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) the Exchange Notes acquired in exchange for
Private Notes pursuant to the Exchange Offer are being acquired in the ordinary
course of business of the person receiving such Exchange Notes, (ii) the holder
is not participating in, and has no arrangement with any person to participate
in, the distribution of Exchange Notes received in exchange for Private Notes
within the meaning of the Securities Act, and (iii) neither the holder nor any
such other person is an "affiliate" (within the meaning of Rule 405 under the
Securities Act) of the Company or a broker-dealer tendering Private Notes
acquired directly from the Company. If the holder is a broker-dealer that will
receive Exchange Notes for its own account in exchange for Private Notes, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Notes.
The enclosed Letter to Clients contains an authorization by the
beneficial owners of the Private Notes for you to make the foregoing
representations.
<PAGE>
The Company will not pay any fee or commission to any broker or dealer
or to any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Exchange Offer. The Company
will pay or cause to be paid any transfer taxes payable on the transfer of Old
Notes to it, except as otherwise provided in Instruction 13 of the enclosed
Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
AMERICAN STOCK TRANSFER & TRUST COMPANY
<PAGE>
ENGLE HOMES, INC.
LETTER TO CLIENTS
FOR
OFFER TO EXCHANGE ITS
9 1/4% SERIES C SENIOR NOTES DUE 2008
FOR ANY AND ALL OF ITS OUTSTANDING
9 1/4% SENIOR NOTES DUE 2008 AND
9 1/4% SERIES B SENIOR NOTES DUE 2008
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 1998, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
To Our Clients:
We are enclosing herewith a Prospectus, dated , 1998, of Engle Homes,
Inc., a Florida corporation (the "Company"), and a related Letter of Transmittal
(which together constitute the "Exchange Offer"), relating to the offer by the
Company to exchange its 9 1/4% Series C Senior Notes due 2008 (the "Exchange
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), for a like principal amount of its issued and
outstanding 9 1/4% Senior Notes due 2008 and 9 1/4% Series B Senior Notes due
2008 (collectively, the "Old Notes") upon the terms and subject to the
conditions set forth in the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum number of Old
Notes being tendered.
We are the holder of record of Old Notes held by us for your account. A
tender of such Old Notes can be made only by us as the record holder and
pursuant to your instructions. The Letter of Transmittal is furnished to you for
your information only and cannot be used by you to tender Old Notes held by us
for your account.
We request instructions as to whether you wish to tender any or all of
the Old Notes held by us for your account pursuant to the terms and conditions
of the Exchange Offer. We also request that you confirm that we may on your
behalf make the representations and warranties contained in the Letter of
Transmittal.
Very truly yours,
<PAGE>
ENGLE HOMES, INC.
INSTRUCTION TO REGISTERED HOLDER AND/OR DEPOSITORY
TRUST COMPANY PARTICIPANT FROM BENEFICIAL OWNER
FOR
OFFER TO EXCHANGE ITS
9 1/4% SERIES C SENIOR NOTES DUE 2008
FOR ANY AND ALL OF ITS OUTSTANDING
9 1/4% SENIOR NOTES DUE 2008 AND
9 1/4% SERIES B SENIOR NOTES DUE 2008
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated ,
1998, of Engle Homes, Inc., a Florida corporation (the "Company"), and a related
Letter of Transmittal (which together constitute the "Exchange Offer"), relating
to the offer by the Company to exchange its 9 1/4% Series C Senior Notes due
2008 (the "Exchange Notes"), which have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), for a like principal amount of its
issued and outstanding 9 1/4% Senior Notes due 2008 and 9 1/4% Series B Senior
Notes due 2008 (collectively, the "Old Notes") upon the terms and subject to the
conditions set forth in the Exchange Offer. Capitalized terms used but not
defined herein have the meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or Depository Trust
Company Participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Old Notes held by you for the account of the
undersigned.
The aggregate face amount of the Old Notes held by you for the account
of the undersigned is (FILL IN AMOUNT):
$________________________ of the 9 1/4% Senior Notes due 2008.
$________________________of the 9 1/4% Series B Senior Notes due 2008.
With respect to the Exchange Offer, the undersigned hereby instructs
you (CHECK APPROPRIATE BOX):
[ ] To TENDER the following Old Notes held by you for the account of
the undersigned (INSERT PRINCIPAL AMOUNT OF OLD NOTES TO BE TENDERED IF LESS
THAN ALL):
$_____________________________________________________________________.
[ ] NOT to TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) the
Exchange Notes acquired in exchange for Private Notes pursuant to the Exchange
Offer are being acquired in the ordinary course of business of the person
receiving such Exchange Notes, (ii) the undersigned is not participating in, and
has no arrangement with any person to participate in, the distribution within
the meaning of the Securities Act of Exchange Notes received in exchange for
Private Notes, and (iii) neither the undersigned nor any such other person is an
"affiliate" (within the meaning of Rule 405 under the Securities Act) of the
Company or a broker-dealer tendering Private Notes acquired directly from the
Company. If the undersigned is a broker-dealer
<PAGE>
that will receive Exchange Notes in exchange for Private Notes for its own
account, it acknowledges that it will deliver a prospectus in connection with
any resale of such Exchange Notes.
___________________________________________________
SIGN HERE
___________________________________________________
Name of beneficial owner(s)
___________________________________________________
Signature(s)
___________________________________________________
Name(s) (please print)
___________________________________________________
___________________________________________________
(Address)
___________________________________________________
(Telephone Number)
___________________________________________________
(Taypayer Identification or Social Security Number)
___________________________________________________
Date
