As filed with the Securities and Exchange Commission on August 28, 2001
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
HOVNANIAN K. HOVNANIAN
ENTERPRISES, INC. ENTERPRISES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware New Jersey
(State or Other Jurisdiction of Incorporation or Organization)
22-1851059 22-2423583
(I.R.S. Employer Identification Number)
10 Highway 35 10 Highway 35
P.O. Box 500 P.O. Box 500
Red Bank, New Jersey 07701 Red Bank, New Jersey 07701
(732) 747-7800 (732) 747-7800
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
SEE TABLE OF ADDITIONAL REGISTRANTS
-----------------------------------
J. Larry Sorsby
Hovnanian Enterprises, Inc.
10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
(732) 747-7800
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Copies to:
Vincent Pagano, Jr., Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
(212) 455-2000
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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(c)
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 delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Proposed Proposed
maximum maximum Amount of
Title of each class of Amount to be offering price aggregate registration
securities to be registered registered per unit offering price fee
Debt Securities, Class A Common Stock, Preferred Stock, $300,000,000 100%(2) $300,000,000(2) $75,000
Warrants, Stock Purchase Contracts and Stock Purchase
Units(1).................................................
Guarantees of Hovnanian Enterprises, Inc. of Debt
Securities and Warrants of K. Hovnanian Enterprises, Inc.
and Guarantees of Subsidiary Guarantors of Debt Securities (3) (3) (3) None
and Warrants of Hovnanian Enterprises, Inc. and K.
Hovnanian Enterprises, Inc.
Total........................................................ $300,000,000(2) 100%(2) $300,000,000(2) $75,000
===================================================================================================================================
(1) The Debt Securities registered hereby include such additional amount as
may be necessary so that, if Debt Securities are issued with an original
issue discount, the aggregate initial offering prices of all Debt
Securities will equal no more than $300,000,000. There are also being
registered hereunder an indeterminate number of shares of Class A Common
Stock as shall be issuable upon conversion or redemption of Preferred
Stock or Debt Securities registered hereby.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) No separate consideration will be received for the Guarantees.
Any securities registered hereunder may be sold separately or as units
with other securities registered hereunder.
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
Prospectus herein also relates to the remaining $76,000,000 of Debt
Securities, Warrants to purchase Debt Securities, Preferred Stock and Class A
Common Stock registered on Form S-3 (Registration No. 333-75939) and Form S-3
(Registration No. 333-51991) of Hovnanian Enterprises, Inc. and K. Hovnanian
Enterprises, Inc. and 7,643,312 allocated shares of Class A Common Stock of
Hovnanian Enterprises, Inc. registered on Form S-3 (Registration No.
333-51991) of K. Hovnanian Enterprises, Inc. This Registration Statement also
constitutes Post-Effective Amendment No. 1 to Registration Statement No.
333-75939 and Post-Effective Amendment No. 2 to Registration Statement No.
333-51991 and upon the effectiveness of such Post-Effective Amendments, this
Registration Statement and Registration Statements No. 333-75939 and No.
333-51991 will relate to an aggregate of $376,000,000 of Class A Common Stock,
Preferred Stock, Debt Securities and Warrants to purchase Debt Securities of
Hovnanian Enterprises, Inc., Debt Securities guaranteed by Hovnanian
Enterprises, Inc. of K. Hovnanian Enterprises, Inc., and Warrants guaranteed
by Hovnanian Enterprises, Inc. to purchase Debt Securities of K. Hovnanian
Enterprises, Inc. (any or all of which Debt Securities and Warrants may be
guaranteed by the registrant Subsidiary Guarantors described herein) and
7,643,312 shares of Class A Common Stock of Hovnanian Enterprises, Inc.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
TABLE OF ADDITIONAL REGISTRANTS
State
or other
Jurisdiction Address
Exact Name of of IRS Including ZIP Code, And
Registrant As Incorporation Employer Telephone Number Including
Specified In Its or Identification Area Code, Of Registrant's
Charter Organization Number Principal Executive Offices
- --------------------- ------------- -------------- ----------------------------
- --------------------- ------------- -------------- ----------------------------
All Seasons, Inc. MD 52-0855385 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Arrow Properties, NJ 22-1945442 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Ballantrae Development FL 22-3366681 10 Highway 35
Corp. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Ballantrae Home Sales, FL 22-3312524 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Ballantrae Marina, Inc. FL 22-3433301 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Condominium Community MD 52-2002262 10 Highway 35
(Bowie New Town), Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Condominium Community MD 52-2002261 10 Highway 35
(Largo Town), Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Condominium Community MD 52-2002264 10 Highway 35
(Park Place), Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Condominium Community MD 52-2002265 10 Highway 35
(Quail Run), Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Condominium Community MD 52-2002263 10 Highway 35
(Truman Drive), Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Consultants Corporation MD 52-0856601 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Designed Contracts, MD 52-0854124 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Dryer Associates, NJ 22-2626494 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Eastern National Title FL 22-2774781 10 Highway 35
Insurance Agency, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Eastern Title Agency, NJ 22-2822803 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
EXC, Inc. DE 22-3178077 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Fortis Finance, Inc. NC 56-1480946 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Fortis Homes, Inc. NC 56-1477716 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Fortis Title, Inc. NC 56-1729325 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Founders Title Agency, VA 22-3293533 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Governor's Abstract PA 22-3278556 10 Highway 35
Co., Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Hexter Fair Land Title TX 75-2604041 10 Highway 35
Company I Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Homebuyer's Mortgage, MD 52-1824817 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Housing-Home Sales, MD 52-0846210 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Hovnanian at Tarpon FL 22-2436504 10 Highway 35
Lakes I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Hovnanian Developments FL 22-2416624 10 Highway 35
of Florida, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Hovnanian Financial NJ 22-2509690 10 Highway 35
Services I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Hovnanian Financial NJ 22-2586974 10 Highway 35
Services II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Hovnanian Financial NJ 22-2722906 10 Highway 35
Services III, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Hovnanian Financial NJ 22-2707601 10 Highway 35
Services IV, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Hovnanian Pennsylvania, PA 22-1097670 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Hovnanian Properties of NJ 22-1945461 10 Highway 35
Atlantic County, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Jersey City Danforth NJ 22-2976939 10 Highway 35
CSO, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hov International, NJ 22-3188610 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian NJ 22-3406671 10 Highway 35
Acquisitions, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3178078 10 Highway 35
Ashburn Village, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-1945458 10 Highway 35
Atlantic City, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at FL 22-3409425 10 Highway 35
Estates, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3583846 10 Highway 35
Barrington, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3331038 10 Highway 35
Bedminster II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-1945452 10 Highway 35
Bedminster, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3253529 10 Highway 35
Belmont, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2643596 10 Highway 35
Bernards II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2774853 10 Highway 35
Bernards III, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3292171 10 Highway 35
Bernards IV, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2790298 10 Highway 35
Branchburg I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2926245 10 Highway 35
Branchburg II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2961099 10 Highway 35
Branchburg III, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3547807 10 Highway 35
Bridgeport, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2765938 10 Highway 35
Bridgewater II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-4049666 10 Highway 35
Bridgewater IV, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2713924 10 Highway 35
Bridgewater V, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3243298 10 Highway 35
Bridgewater VI, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3192910 10 Highway 35
Bull Run, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3412130 10 Highway 35
Burlington III, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2949611 10 Highway 35
Burlington, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3324654 10 Highway 35
Calabria, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3459993 10 Highway 35
Cameron Chase, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3320550 10 Highway 35
Carmel Del Mar, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at FL 22-3188607 10 Highway 35
Carolina Country P.O. Box 500
Club I, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at FL 22-3247085 10 Highway 35
Carolina Country P.O. Box 500
Club II, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at FL 22-3273706 10 Highway 35
Carolina Country P.O. Box 500
Club III, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3356308 10 Highway 35
Castile, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2892342 10 Highway 35
Cedar Grove I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2892341 10 Highway 35
Cedar Grove II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3565730 10 Highway 35
Chaparral, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NY 22-2618176 10 Highway 35
Clarkstown, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at FL 22-3275859 10 Highway 35
Coconut Creek, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3493450 10 Highway 35
Crestline, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3406656 10 Highway 35
Crystal Springs, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3602177 10 Highway 35
Dominguez, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3433318 10 Highway 35
Dominion Ridge, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2809056 10 Highway 35
East Brunswick V, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2892496 10 Highway 35
East Brunswick VI, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2776654 10 Highway 35
East Brunswick P.O. Box 500
VIII, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at PA 22-3483220 10 Highway 35
East Whiteland P.O. Box 500
I, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3331043 10 Highway 35
Exeter Hills, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Fair VA 22-3261224 10 Highway 35
Lakes Glen, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Fair VA 22-3249049 10 Highway 35
Lakes, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2348977 10 Highway 35
Freehold Township, P.O. Box 500
Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2459186 10 Highway 35
Freehold Township P.O. Box 500
I, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at FL 22-2652958 10 Highway 35
Ft. Myers I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at FL 22-2636393 10 Highway 35
Ft. Myers II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Great NJ 22-3330582 10 Highway 35
Notch, Inc. (formally P.O. Box 500
K. Hovnanian at Berlin, Red Bank, New Jersey 07701
Inc.) 732-747-7800
K. Hovnanian at NJ 22-2765936 10 Highway 35
Hackettstown, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Half FL 22-2915380 10 Highway 35
Moon Bay, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3583845 10 Highway 35
Hampton Oaks, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3133218 10 Highway 35
Hanover, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at PA 22-3445102 10 Highway 35
Hershey's Mill, Inc. P.O. Box 500
(a PA Corp) Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3309241 10 Highway 35
Highland Vineyards, P.O. Box 500
Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Holly VA 22-3214275 10 Highway 35
Crest, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3345622 10 Highway 35
Hopewell IV, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3464499 10 Highway 35
Hopewell V, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3465709 10 Highway 35
Hopewell VI, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2500651 10 Highway 35
Horizon Heights, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2859308 10 Highway 35
Howell Township, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2562956 10 Highway 35
Howell Township P.O. Box 500
II, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3321100 10 Highway 35
Hunter Estates, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at FL 22-2914590 10 Highway 35
Jacksonville II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3427233 10 Highway 35
Jefferson, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2562961 10 Highway 35
Jersey City I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2935352 10 Highway 35
Jersey City II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3016528 10 Highway 35
Jersey City III, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Kings NJ 22-2601064 10 Highway 35
Grant I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2572443 10 Highway 35
Klockner Farms, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at La CA 22-3303807 10 Highway 35
Terraza, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at La CA 22-3369099 10 Highway 35
Trovata, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2618178 10 Highway 35
Lakewood, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3638073 10 Highway 35
Lawrence V, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2571403 10 Highway 35
Lawrence Square, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Locust NJ 22-3359254 10 Highway 35
Grove I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Lower PA 22-3602924 10 Highway 35
Saucon II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Lower PA 22-2961090 10 Highway 35
Saucon, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Mahwah NJ 22-2859315 10 Highway 35
II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Mahwah NJ 22-3015286 10 Highway 35
IV, Inc. (Whalepond) P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Mahwah NJ 22-3337896 10 Highway 35
IX, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian
at Mahwah V, Inc. NJ 22-2868663 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Mahwah NJ 22-3188612 10 Highway 35
VI, Inc.(Norfolk) P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Mahwah NJ 22-2592139 10 Highway 35
VII, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Mahwah NJ 22-2246316 10 Highway 35
VIII, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2765935 10 Highway 35
Manalapan II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2442998 10 Highway 35
Manalapan, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2748659 10 Highway 35
Marlboro Township P.O. Box 500
II, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3467252 10 Highway 35
Marlboro Township P.O. Box 500
IV, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian of NJ 22-3791976 10 Highway 35
Marlboro Township P.O. Box 500
VI, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian of NJ 22-3791977 10 Highway 35
Marlboro Township P.O. Box 500
VII, NJ Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2847845 10 Highway 35
Marlboro, III P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3188613 10 Highway 35
Medford I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NH 22-2821914 10 Highway 35
Merrimack, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian of Metro VA 22-3583847 10 Highway 35
DC South, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2759221 10 Highway 35
Montclair NJ, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3188614 10 Highway 35
Montclair, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at PA 22-3165601 10 Highway 35
Montgomery I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2765937 10 Highway 35
Montville II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2343552 10 Highway 35
Montville, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2722766 10 Highway 35
Newark I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2885748 10 Highway 35
Newark Urban P.O. Box 500
Renewal Corporation Red Bank, New Jersey 07701
I, Inc. 732-747-7800
K. Hovnanian at NJ 22-3027957 10 Highway 35
Newark Urban P.O. Box 500
Renewal Corporation Red Bank, New Jersey 07701
IV, Inc. 732-747-7800
K. Hovnanian at NJ 22-3027960 10 Highway 35
Newark Urban P.O. Box 500
Renewal Corporation Red Bank, New Jersey 07701
V, Inc. 732-747-7800
K. Hovnanian at NJ 22-2788417 10 Highway 35
North Brunswick P.O. Box 500
II, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2892493 10 Highway 35
North Brunswick P.O. Box 500
III, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3036037 10 Highway 35
North Brunswick P.O. Box 500
IV, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NY 22-2814372 10 Highway 35
Northern P.O. Box 500
Westchester, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3336696 10 Highway 35
Northlake, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3565732 10 Highway 35
Ocean Walk, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3583840 10 Highway 35
P.C. Properties, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3253530 10 Highway 35
Park Ridge, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at FL 22-2636392 10 Highway 35
Pasco I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at FL 22-2790300 10 Highway 35
Pasco II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NY 22-2718071 10 Highway 35
Peekskill, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at FL 22-3273708 10 Highway 35
Pembroke Shores, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at PA 22-3094743 10 Highway 35
Perkiomen I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at PA 22-3301197 10 Highway 35
Perkiomen II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3065323 10 Highway 35
Plainsboro I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2790297 10 Highway 35
Plainsboro II,Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3027955 10 Highway 35
Plainsboro III, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Polo FL 22-3284165 10 Highway 35
Trace, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Port NJ 22-3450185 10 Highway 35
Imperial North, Inc. P.O. Box 500
Red Bank, New Jersey 07701
K. Hovnanian Properties NJ 22-2593811 10 Highway 35
of East Brunswick P.O. Box 500
II, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3322125 10 Highway 35
Princeton, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3369102 10 Highway 35
Rancho P.O. Box 500
Christianitos, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3326386 10 Highway 35
Raritan I, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3085521 10 Highway 35
Readington II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2510587 10 Highway 35
Reservoir Ridge, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3199603 10 Highway 35
River Oaks, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3493454 10 Highway 35
San Sevaine, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3547806 10 Highway 35
Saratoga, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3464496 10 Highway 35
Scotch Plains II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2380821 10 Highway 35
Scotch Plains, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at MD 22-3331047 10 Highway 35
Seneca Crossing, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3418731 10 Highway 35
Smithville, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2776387 10 Highway 35
Smithville III, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2998840 10 Highway 35
Somerset VIII, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at South NJ 22-2458485 10 Highway 35
Brunswick II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at South NJ 22-2652530 10 Highway 35
Brunswick III, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at South NJ 22-2859309 10 Highway 35
Brunswick IV, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at South NJ 22-2937570 10 Highway 35
Brunswick V, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at South NJ 22-3039668 10 Highway 35
Brunswick, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Spring NJ 22-3192909 10 Highway 35
Ridge, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Stone CA 22-3512641 10 Highway 35
Canyon, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3582033 10 Highway 35
Stonegate, Inc. P.O. Box 500
(a CA Corporation) Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3481223 10 Highway 35
Stonegate, Inc. P.O. Box 500
(a VA Corporation) Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-2758195 10 Highway 35
Stony Point, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Stuart VA 22-3312918 10 Highway 35
Road, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Sully VA 22-3188746 10 Highway 35
Station, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3583842 10 Highway 35
Summerwood, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 33-0890768 10 Highway 35
Sunsets, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3493456 10 Highway 35
Sycamore, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3396608 10 Highway 35
Tannery Hill, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-1841019 10 Highway 35
The Bluff, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3406664 10 Highway 35
The Cedars, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3618411 10 Highway 35
The Glen, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at the NJ 22-2934223 10 Highway 35
Reserve at P.O. Box 500
Medford, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at PA 22-3462983 10 Highway 35
Thornbury, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3351875 10 Highway 35
Tierrasanta, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NY 22-3516266 10 Highway 35
Tuxedo, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian of NJ 22-3027952 10 Highway 35
Union Township P.O. Box 500
I, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3415873 10 Highway 35
Upper Freehold P.O. Box 500
Township I, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at PA 22-3302321 10 Highway 35
Upper Makefield P.O. Box 500
I, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at PA 22-3188608 10 Highway 35
Upper Merion, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Vail CA 22-3320537 10 Highway 35
Ranch, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3252533 10 Highway 35
Valleybrook II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3057022 10 Highway 35
Valleybrook, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Wall NJ 22-2422378 10 Highway 35
Township II, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Wall NJ 22-2262938 10 Highway 35
Township IV, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Wall NJ 22-2859303 10 Highway 35
Township VI, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Wall NJ 22-3434644 10 Highway 35
Township VII, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Wall NJ 22-3434643 10 Highway 35
Township VIII, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Wall NJ 22-2442914 10 Highway 35
Township, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NY 22-2717887 10 Highway 35
Washingtonville, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Wayne NJ 22-2607669 10 Highway 35
III, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Wayne NJ 22-2406468 10 Highway 35
IV, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Wayne NJ 22-2790299 10 Highway 35
V, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Wayne NJ 22-3367624 10 Highway 35
VI, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Wayne NJ 22-3464498 10 Highway 35
VII, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at West NJ 22-2820279 10 Highway 35
Orange, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-3312525 10 Highway 35
Wildrose, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at FL 22-3219184 10 Highway 35
Winston Trails, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 52-1785667 10 Highway 35
Woodmont, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian DE 22-2627859 10 Highway 35
Aviation, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Companies NJ 22-2445216 10 Highway 35
Northeast, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Companies CA 22-3301757 10 Highway 35
of California, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Companies FL 22-2349530 10 Highway 35
of Florida, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Companies MD 22-3331050 10 Highway 35
of Maryland, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Companies VA 22-3169584 10 Highway 35
of Metro Washington, P.O. Box 500
Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Companies NY 22-2618171 10 Highway 35
of New York, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Companies NC 22-2765939 10 Highway 35
of North Carolina, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Companies PA 22-2390174 10 Highway 35
of Pennsylvania, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Companies CA 22-3493449 10 Highway 35
of Southern California, P.O. Box 500
Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian NJ 22-3406668 10 Highway 35
Construction P.O. Box 500
Management, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian's Design CA 22-3301757 10 Highway 35
Gallery, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian CA 22-3303806 10 Highway 35
Developments of P.O. Box 500
California, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian MD 22-3331045 10 Highway 35
Developments of P.O. Box 500
Maryland, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian VA 22-3188615 10 Highway 35
Developments of P.O. Box 500
Metro Washington, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian NJ 22-2664563 10 Highway 35
Developments of P.O. Box 500
New Jersey, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian NY 22-2626492 10 Highway 35
Developments of P.O. Box 500
New York, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian TX 22-3685786 10 Highway 35
Developments of P.O. Box 500
Texas, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian NJ 22-2423583 10 Highway 35
Enterprises, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Equities, NJ 21-0735206 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Florida FL 22-318616 10 Highway 35
Division, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Investment NJ 22-2541361 10 Highway 35
Properties of New P.O. Box 500
Jersey, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Investment NJ 22-2627866 10 Highway 35
Properties, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian NJ 22-3663108 10 Highway 35
Investments, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Marine, NJ 22-3196910 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Mortgage NJ 22-2892496 10 Highway 35
USA, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Mortgage, NJ 22-1470679 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian North DE 22-3556344 10 Highway 35
Jersey Acquisitions, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Not an 22-3376430 10 Highway 35
Poland, SP. Z.O.O. entity P.O. Box 500
incorporated Red Bank, New Jersey 07701
or organized 732-747-7800
in the United
States
K. Hovnanian NJ 22-3027956 10 Highway 35
Port Imperial P.O. Box 500
Urban Renewal, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian NJ 22-2593811 10 Highway 35
Properties of East P.O. Box 500
Brunswick, II, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Properties NJ 22-2869319 10 Highway 35
of Franklin, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Properties NJ 22-2380821 10 Highway 35
of Hamilton, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Properties FL 22-2360970 10 Highway 35
of Lake Worth, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Properties NJ 22-3406661 10 Highway 35
of NB Theatre, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Properties NJ 22-3017267 10 Highway 35
of Newark Urban Renewal P.O. Box 500
Corporation, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Properties NJ 22-3002434 10 Highway 35
of North P.O. Box 500
Brunswich II, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Properties NJ 22-2057907 10 Highway 35
of North Brunswick P.O. Box 500
V, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Properties NJ 22-3360859 10 Highway 35
of North P.O. Box 500
Center Drive, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Properties NJ 22-2859305 10 Highway 35
of Piscataway, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Properties NJ 22-3092532 10 Highway 35
of Red Bank, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Properties NJ 22-3219172 10 Highway 35
of Route 35, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Properties NJ 22-3244134 10 Highway 35
of Wall, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Real NJ 22-1945444 10 Highway 35
Estate Investment, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Real FL 65-0215569 10 Highway 35
Estate of Florida, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian FL 22-3331675 10 Highway 35
Southeast Florida, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian FL 22-3331674 10 Highway 35
Southeast Region, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian's Four FL 22-3618584 10 Highway 35
Seasons of P.O. Box 500
the Palm Beaches, Inc. Red Bank, New Jersey 07701
732-747-7800
KHC Acquisition, Inc. CA 22-3303802 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
KHL, Inc. DE 22-2504325 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Kings Grant Evesham NJ 22-2445215 10 Highway 35
Corp. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Landarama, Inc. NJ 22-1978612 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford DE 22-3386728 10 Highway 35
of Delaware, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Minerva Group, Inc. NJ 22-2652839 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Molly Pitcher NJ 22-2577062 10 Highway 35
Construction Co., Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
New Fortis Mortgage, NC 56-1520482 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
New K. Hovnanian FL 58-2003324 10 Highway 35
Developments of P.O. Box 500
Florida, Inc. Red Bank, New Jersey 07701
732-747-7800
Park Village Realty, NJ 22-3146498 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Parthenon Group, Inc. NJ 22-2748658 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Pine Brook Co., Inc. NJ 22-1762833 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Preston Grande Homes, NC 56-2138108 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Que Corporation MD 52-1723878 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Reflections of You TX 75-1967894 10 Highway 35
Interiors, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Stonebrook Homes, Inc. CA 33-0553884 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
The Matzel & Mumford NJ 22-3670677 10 Highway 35
Organization, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
The New Fortis NC 56-1458833 10 Highway 35
Corporation P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
The Southampton MD 52-0881406 10 Highway 35
Corporation P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Tropical Service FL 59-1426699 10 Highway 35
Builders, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Washington Homes DE Inactive 10 Highway 35
of Delaware, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Washington Homes of WV 54-1860514 10 Highway 35
West Virginia, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Washington Homes, DE 22-3774737 10 Highway 35
Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Washington Homes, Inc. VA 52-0898765 10 Highway 35
of Virginia P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Westminster Homes NC 52-1970973 10 Highway 35
(Charlotte), Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Westminster Homes TN 52-1973363 10 Highway 35
of Tennessee, Inc. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Westminster Homes, Inc. NC 52-1874680 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
WH Land I, Inc. MD 52-2073468 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
WH Land II, Inc. MD 52-1887626 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
WH Properties, Inc. MD 52-1955560 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Arbor West, L.L.C. MD 52-19555560 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Heritage Pines, L.L.C. NC 56-2113600 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Arbor CA 33-0890775 10 Highway 35
Heights, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at MD 22-3681031 10 Highway 35
Ashburn Village, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3804316 10 Highway 35
Barnegat I, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3644632 10 Highway 35
Berkeley, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3618587 10 Highway 35
Bernards V, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at MD 22-3688865 10 Highway 35
Blooms Crossing, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Blue NJ 22-3630449 10 Highway 35
Heron Pines, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3683842 10 Highway 35
Brenbrooke, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 52-2147831 10 Highway 35
Carmel Village, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Cedar NJ 22-3818491 10 Highway 35
Grove III, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3618347 10 Highway 35
Chester I, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3655976 10 Highway 35
Clifton, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at MD 22-3757772 10 Highway 35
Columbia Town P.O. Box 500
Center, L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3814347 10 Highway 35
Cranbury, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3776466 10 Highway 35
Curries Woods, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 33-0890770 10 Highway 35
Encinitas Ranch, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3653007 10 Highway 35
Guttenberg, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3795544 10 Highway 35
Hamburg, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3814175 10 Highway 35
Hamburg Contractors, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3630450 10 Highway 35
Jackson, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3655974 10 Highway 35
Jersey City IV, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at MD 22-3668315 10 Highway 35
Kent Island, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at MD 22-3664456 10 Highway 35
Kincaid, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at King MD 22-3647924 10 Highway 35
Farm, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3658926 10 Highway 35
LaFayette Estates, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Lake VA 22-3778537 10 Highway 35
Ridge Crossing, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Lake VA 22-3647920 10 Highway 35
Terrapin, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3638073 10 Highway 35
Lawrence V, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3663731 10 Highway 35
Linwood, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Little NJ 22-3795535 10 Highway 35
Egg Harbor, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Little NJ Applied For 10 Highway 35
Egg Harbor Contractors, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Lower PA 22-3785544 10 Highway 35
Moreland I, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Lower PA 22-3785539 10 Highway 35
Moreland II, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Lower PA 22-3602924 10 Highway 35
Saucon II, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3556345 10 Highway 35
Mansfield I, LLC P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3556346 10 Highway 35
Mansfield II, LLC P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3683839 10 Highway 35
Mansfield III, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3802594 10 Highway 35
Marlboro Township P.O. Box 500
VIII, L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3791976 10 Highway 35
Marlboro VI, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3791977 10 Highway 35
Marlboro VII, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 52-2147832 10 Highway 35
Menifee, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3630452 10 Highway 35
Middletown, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at Mt. NJ 22-3813043 10 Highway 35
Olive Township, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3627814 10 Highway 35
North Brunswick P.O. Box 500
VI, L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3770598 10 Highway 35
North Haledon, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3785527 10 Highway 35
Northampton, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3665826 10 Highway 35
Northfield, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at TX 33-0890774 10 Highway 35
Pacific Bluffs, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3687884 10 Highway 35
Paramus, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 33-0896285 10 Highway 35
Park Lane, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at VA 22-3647925 10 Highway 35
Prince William, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 33-0890773 10 Highway 35
Rancho Santa P.O. Box 500
Margarita, L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 33-0890777 10 Highway 35
Riverbend, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at MD 22-3756336 10 Highway 35
Roderuck, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 22-2147833 10 Highway 35
Rowland Heights, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3663105 10 Highway 35
Sayreville, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3655682 10 Highway 35
South Amboy, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at MD 22-3688868 10 Highway 35
South Bank, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at MD 22-3688864 10 Highway 35
Spring Hill Road, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at MD 33-0890768 10 Highway 35
St. Margarets, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 33-0890769 10 Highway 35
Sunsets, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at the NC 22-3655975 10 Highway 35
Gables, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3666680 10 Highway 35
Upper Freehold P.O. Box 500
Township I, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3626037 10 Highway 35
Upper Freehold P.O. Box 500
Township II, Inc. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3743403 10 Highway 35
Wanaque, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3618348 10 Highway 35
Washington, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3618242 10 Highway 35
Wayne VIII, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 22-3709105 10 Highway 35
West Milford, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at NJ 52-2147836 10 Highway 35
West Windsor, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at MD 22-3556343 10 Highway 35
Willow Brook, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian at CA 52-2147836 10 Highway 35
Winchester, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Central DE 22-3556343 10 Highway 35
Acquisitions, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Companies MD 22-3683159 10 Highway 35
of Metro D.C. P.O. Box 500
North, L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian North DE 22-3554986 10 Highway 35
Central Acquisitions, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian North DE 22-3556344 10 Highway 35
Jersey Acquisitions, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian Shore DE 22-3556342 10 Highway 35
Acquisitions, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian South DE 22-3556341 10 Highway 35
Jersey Acquisition, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian's Four CA 52-2147837 10 Highway 35
Seasons, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
K. Hovnanian's Private NJ 22-3766856 10 Highway 35
Home Portfolio, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Kings Court at NJ Applied For 10 Highway 35
Montgomery, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Kings Crossing at NJ 22-3468988 10 Highway 35
Montgomery, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Knox Creek, L.L.C. NJ 62-1808932 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M at Apple Ridge, NJ Applied For 10 Highway 35
L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M at Brookhill, NJ Applied For 10 Highway 35
L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M at Heritage NJ Applied For 10 Highway 35
Woods, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M at the Highlands, NJ Applied For 10 Highway 35
L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
McKinley Court, L.L.C. NJ Applied For 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M at Morristown, NJ Applied For 10 Highway 35
L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M at Roosevelt, NJ Applied For 10 Highway 35
L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M at Sheridan, NJ Applied For 10 Highway 35
L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M at Sparta, L.L.C. NJ Applied For 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M at Spinnaker NJ Applied For 10 Highway 35
Pointe, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M at Spruce Hollow, NJ Applied For 10 Highway 35
L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M at Spruce Meadows, NJ Applied For 10 Highway 35
L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M at Spruce Run, NJ Applied For 10 Highway 35
L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford NJ 22-3526713 10 Highway 35
at Apple Ridge P.O. Box 500
II, L.L.C. Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford at NJ 22-3420654 10 Highway 35
Basking Ridge, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford at NJ 22-3569945 10 Highway 35
Cranbury Knoll, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford at NJ 22-3468991 10 Highway 35
Freehold, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford at NJ 22-3575932 10 Highway 35
Heritage Landing, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford at NJ 22-3500542 10 Highway 35
Montgomery, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford at NJ 22-3619267 10 Highway 35
Phillipsburg, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford at NJ 22-3445832 10 Highway 35
Piscataway, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford at NJ 22-345834 10 Highway 35
South Brunswick, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford NJ 22-3394132 10 Highway 35
at Tewksbury, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford at NJ 22-3434254 10 Highway 35
West Windsor, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford at NJ 22-3349820 10 Highway 35
White Oak Estates, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford at NJ 22-3434256 10 Highway 35
Willows Pond, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Matzel & Mumford at NJ 22-3575934 10 Highway 35
Woodland Crest, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Monticello Woods, MS 62-1811038 10 Highway 35
L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
New Homebuyers VA 54-1781635 10 Highway 35
Title Co. P.O. Box 500
(Virginia) L.L.C. Red Bank, New Jersey 07701
732-747-7800
New Homebuyers Title MD 52-1932728 10 Highway 35
Company, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Shadow Creek, L.L.C. AL 62-1808935 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Section 14 of the NJ 22-3330375 10 Highway 35
Hills, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
The Landings at NJ Applied For 10 Highway 35
Spinnaker Pointe, P.O. Box 500
L.L.C. Red Bank, New Jersey 07701
732-747-7800
Title Group II, L.L.C. TN 62-1808935 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Town Homes at NJ 22-3666795 10 Highway 35
Montgomery, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Westminster Homes MD 63-1222540 10 Highway 35
of Alabama, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Westminster Homes of MD 64-0907820 10 Highway 35
Mississippi, L.L.C. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Westwood Hills, L.L.C. AL 62-1808934 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
WH/PR Land Co., L.L.C. DE 52-1959291 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Athena Portfolio DE 13-3763651 10 Highway 35
Investors, L.P. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Beacon Manor NJ 22-3358382 10 Highway 35
Associates, L.P. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Galleria Mortgage, L.P. TX 75-2801961 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Goodman Family TX 75-2653675 10 Highway 35
Builders, L.P. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Goodman Mortgage TX 75-2801067 10 Highway 35
Investors, L.P. P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
M&M Investments, L.P. NJ 22-3685183 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Parkway Development NC 56-1536568 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Sovereign Group, L.P. NJ 22-2661796 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
Washabama, L.P. AL 63-1231207 10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
732-747-7800
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 of any
such state.
Subject to Completion, dated August 28, 2001
PROSPECTUS
$376,000,000
Hovnanian Enterprises, Inc.
Preferred Stock
Class A Common Stock
Warrants to Purchase Preferred Stock
Warrants to Purchase Class A Common Stock
Debt Securities
Warrants to Purchase Debt Securities
Stock Purchase Contracts
Stock Purchase Units
K. Hovnanian Enterprises, Inc.
Guaranteed Debt Securities
Guaranteed Warrants to Purchase Debt Securities
7,643,312 Shares
Hovnanian Enterprises, Inc.
--------------------
Class A Common Stock
--------------------
We, Hovnanian Enterprises, Inc., may offer and sell from time to time, in one
or more series:
o our Preferred Stock
o our Class A Common Stock
o our unsecured debt securities consisting of notes, debentures
or other evidences of indebtedness which may be our senior debt
securities, senior subordinated debt securities or subordinated
debt securities,
o warrants to purchase our Preferred Stock, our Class A Common Stock
or our debt securities,
o our Stock Purchase Contracts; and
o our Stock Purchase Units,
or any combination of the these securities.
Our wholly-owned subsidiary, K. Hovnanian Enterprises, Inc., may offer
and sell from time to time, in one or more series:
o its unsecured senior debt securities, senior subordinated debt
securities or subordinated debt securities, which in each case will
be fully and unconditionally guaranteed by us, and
o warrants to purchase K. Hovnanian debt securities, which will be
fully and unconditionally guaranteed by us,
or any combination of these securities.
Our debt securities or warrants or the debt securities or warrants issued
by K. Hovnanian Enterprises may be guaranteed by substantially all of our
wholly-owned subsidiaries.
We or certain of our shareholders may offer and sell from time to time an
aggregate of 7,643,312 shares of Class A Common Stock.
The Preferred Stock, Class A Common Stock, other than any sold by any
selling shareholders, and debt securities and warrants of Hovnanian or K.
Hovnanian may be offered at an aggregate initial offering price not to exceed
$376,000,000 at prices and on terms to be determined at or prior to the time
of sale.
We will provide more specific information about the terms of an offering
of any of these securities in supplements to this prospectus. The securities
may be sold directly by us, K. Hovnanian or selling shareholders to investors,
through agents designated from time to time or to or through underwriters or
dealers. If any agents of Hovnanian, K. Hovnanian or selling shareholders or
any underwriters are involved in the sale of any securities, the names of such
agents or underwriters and any applicable commissions or discounts will be
described in a supplement to this prospectus.
This investment involves risk. See "Risk Factors" beginning on page 4.
These securities have not been approved or disapproved by the Securities and
Exchange Commission or any state securities commission nor have those
organizations determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
--------------------
The date of this Prospectus is August , 2001
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS...................................................3
AVAILABLE INFORMATION........................................................3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................3
THE COMPANY..................................................................4
RISK FACTORS.................................................................4
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS...............................................8
USE OF PROCEEDS..............................................................9
SELLING SHAREHOLDERS.........................................................9
DESCRIPTION OF DEBT SECURITIES..............................................11
DESCRIPTION OF CAPITAL STOCK................................................23
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS............25
DESCRIPTION OF WARRANTS.....................................................26
PLAN OF DISTRIBUTION........................................................27
LEGAL MATTERS...............................................................27
EXPERTS.....................................................................27
2
In this document, "we", "us" or "our" refers to both Hovnanian and K.
Hovnanian.
FORWARD-LOOKING STATEMENTS
All statements in this registration statement, this prospectus and the
information incorporated by reference, including the financial statements and
their accompanying notes, that are not historical facts should be considered
as "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements involve known and unknown
risks, uncertainties and other factors that may cause actual results to differ
materially. Such risks, uncertainties and other factors include, but are not
limited to, changes in general economic conditions, fluctuations in interest
rates, increases in raw materials and labor costs, levels of competition and
other facts described in detail in our form 10-K for the year ended October
31, 2000. See the section "Risk Factors" beginning on page 4.
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission, the
"Commission", a registration statement on Form S-3. This prospectus, which
forms part of the registration statement, does not have all the information
contained in the registration statement. Statements in this prospectus as to
the contents of any contract or other document are not necessarily complete,
and, where a contract or other document is an exhibit to the registration
statement, or was previously filed with the Commission and is now incorporated
by reference, each statement is qualified in all respects by the provision in
the exhibit to which reference is hereby made. A copy of the registration
statement may be inspected by anyone without charge at the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies
of all or any part of the registration statement may be obtained from the
Commission upon payment of certain fees prescribed by the Commission.
We are subject to the informational requirements of the Securities
Exchange Act of 1934, and file reports, proxy statements and other information
with the Commission. You may read and copy any reports, proxy statements and
other information at the Commission's Public Reference Room at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its
regional offices located at 500 West Madison Street, 14th Floor, Chicago,
Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York 10048.
The public may obtain information on the operation of the Public Reference
Room by calling the Commission at 1-800-SEC-0330. Copies of this material also
can be obtained by mail from the Public Reference Section of the Commission,
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at the prescribed rates. The Commission also maintains a website that contains
reports, proxy and information statements and other information. The website
address is: http://www.sec.gov. Hovnanian's Class A Common Stock is listed on
the New York Stock Exchange, and reports, proxy statements and other
information also can be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Hovnanian has filed the following documents with the Commission and these
documents are incorporated herein by reference:
o Annual Report on Form 10-K for the fiscal year ended October 31,
2000, Registration File No. 1-8551,
o Current Reports on Form 8-K filed December 15, 2000 and February 7,
2001, Registration File Nos. 1-8551,
o the description of the Class A Common Stock, par value $.01 per
share, of Hovnanian set forth in Hovnanian's Registration Statement
of Form 8-A filed March 13, 2001 and any amendment or report filed
for the purpose of updating any such description; and
o Quarterly Reports on Form 10-Q for the quarters ended January 31,
2001 and April 30, 2001, Registration File Nos. 1-8551.
All documents filed by Hovnanian 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 offering made by this prospectus are to be
incorporated herein by reference. Any statement contained in a document
incorporated or deemed to be 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 other subsequently filed document
which also is incorporated or deemed to be incorporated by reference herein
modifies or supersedes that statement. Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part
of this prospectus.
3
Hovnanian will provide without charge to each person, including any
beneficial owner, to whom a copy of this prospectus is delivered, upon the
written or oral request of that person, a copy of any or all of the
information incorporated by reference in this Prospectus but not delivered
with this Prospectus, other than exhibits to such information, unless the
exhibits are specifically incorporated by reference into the information that
this prospectus incorporates. Requests for copies should be directed to Paul
W. Buchanan, Senior Vice President--Corporate Controller, Hovnanian
Enterprises, Inc., 10 Highway 35, P.O. Box 500, Red Bank, New Jersey 07701
(telephone: (732) 747-7800).
THE COMPANY
We design, construct and market high quality single-family detached homes
and attached condominium apartments and townhouses in planned residential
developments in the Northeast, primarily in New Jersey, southern New York
state, and eastern Pennsylvania, North Carolina, Metro D.C., which includes
northern Virginia and Maryland, southern California, Texas, Tennessee, Alabama
and Mississippi and provide mortgage banking and title insurance activities.
We market our homes to first-time buyers, first-time and second-time move-up
buyers, luxury buyers, active adult buyers and empty nesters.
Hovnanian was originally incorporated in New Jersey in 1967 as successor
to a business founded in 1959 by Kevork S. Hovnanian and became a Delaware
corporation in August 1983. The Company maintains its executive offices at 10
Highway 35, P.O. Box 500, Red Bank, New Jersey 07701, and its telephone number
is (732) 747-7800.
K. Hovnanian was incorporated in New Jersey in November 1982, as an
indirect wholly-owned consolidated subsidiary of Hovnanian. K. Hovnanian
functions as a management company for the operating subsidiaries of Hovnanian
and borrows funds that it lends to those subsidiaries. K. Hovnanian has
essentially no independent operations and generates no operating revenues. K.
Hovnanian's principal executive offices are located at 10 Highway 35, P.O. Box
500, Red Bank, New Jersey 07701, and its telephone number is (732) 747-7800.
RISK FACTORS
Our substantial leverage places burdens on our ability to comply with the
terms of our indebtedness, may restrict our ability to operate and may prevent
us from fulfilling our obligations.
We have a significant amount of debt. As of April 30, 2001, our
consolidated debt was $536,619,000, excluding Financial Services debt and
Collateralized Mortgage Financing. The amount of our debt could have important
consequences to you. For example, it could:
o limit our ability to obtain future financing for working capital,
capital expenditures, acquisitions, debt service requirements or
other requirements;
o require us to dedicate a substantial portion of our cash flow from
operations to the payment on our debt and reduce our ability to use
our cash flow for other purposes;
o limit our flexibility in planning for, or reacting to, changes in
our business;
o place us at a competitive disadvantage because we have more debt
than some of our competitors; and
o make us more vulnerable in the event of a downturn in our business
or in general economic conditions.
Our ability to meet our debt service and other obligations will depend
upon our future performance. We are engaged in businesses that are
substantially affected by changes in economic cycles. Our revenues and
earnings vary with the level of general economic activity in the markets we
serve. Our businesses are also affected by financial, political, business and
other factors, many of which are beyond our control. The factors that affect
our ability to generate cash can also affect our ability to raise additional
funds for these purposes through the sale of equity securities, the
refinancing of debt or the sale of assets. Changes in prevailing interest
rates may affect our ability to meet our debt service obligations, because
borrowings under our revolving credit facilities bear interest at floating
rates. A higher interest rate on our debt service obligations could result in
lower earnings.
Our business may not generate sufficient cash flow from operations and
borrowings may not be available to us under our revolving credit facilities in
an amount sufficient to enable us to pay our debt service obligations or to
fund our other liquidity needs. We may need to refinance all or a portion of
our debt on or before maturity, which we may not be able to do on favorable
terms or at all.
The indentures governing the debt securities offered hereby and our other
outstanding debt and our revolving credit facilities impose restrictions on
our operations and activities. The most significant restrictions relate to
debt incurrence, sales of
4
assets and cash distributions by us and require us to comply with certain
financial covenants listed in those debt and revolving credit facilities. If
we fail to comply with any of those restrictions or covenants, the trustees or
the banks, as appropriate, could cause our debt to become due and payable
prior to maturity.
The homebuilding industry is significantly affected by changes in general and
local economic conditions, real estate markets and weather conditions, which
could affect our ability to build homes at prices our customers are willing or
able to pay, could reduce profits that may not be recaptured and could result
in cancellation of sales contracts.
The homebuilding industry is cyclical, has from time to time experienced
significant difficulties and is significantly affected by changes in general
and local economic conditions, such as:
o employment levels and job growth;
o availability of financing for home buyers;
o interest rates;
o consumer confidence; and
o housing demand.
An oversupply of alternatives to new homes, such as rental properties and
used homes, could depress prices and reduce margins for the sale of new homes.
Weather conditions and natural disasters such as hurricanes, tornadoes,
earthquakes, floods and fires, can harm the local homebuilding business.
The difficulties described above could cause us to take longer and incur
more costs to build our homes. We may not be able to recapture increased costs
by raising prices in many cases because we fix our prices up to twelve months
in advance of delivery by signing home sales contracts. In addition, some home
buyers may cancel or not honor their home sales contracts altogether.
Our success depends on the availability of suitable undeveloped land and
improved lots at acceptable prices.
Our success in developing land and in building and selling homes depends
in part upon the continued availability of suitable undeveloped land and
improved lots at acceptable prices. The availability of undeveloped land and
improved lots for purchase at favorable prices depends on a number of factors
outside our control, including the risk of competitive over-bidding on land or
lots and restrictive governmental regulation. Should suitable land or lots
become less available, the number of homes we may be able to build and sell
would be reduced, which would reduce revenue and profits.
Changes in economic and market conditions could result in the sale of homes at
a loss or holding land in inventory longer than planned, the cost of which can
be significant.
Land inventory risk can be substantial for homebuilders. We must
continuously seek and make acquisitions of land for expansion into new markets
and for replacement and expansion of land inventory within our current
markets. The market value of undeveloped land, buildable lots and housing
inventories can fluctuate significantly as a result of changing economic and
market conditions. In the event of significant changes in economic or market
conditions, we may have to sell homes at a loss or hold land in inventory
longer than planned. Inventory carrying costs can be significant and can
result in losses from a poorly performing project or market.
Home prices and sales activity in the Northeast and mid-Atlantic markets have
a large impact on our profitability because we conduct a significant portion
of our business in these markets.
We presently conduct a significant portion of our business in the
Northeast and mid-Atlantic markets. Home prices and sales activity in the
Northeast and mid-Atlantic, including in some of the markets in which we
operate, have declined from time to time, particularly as a result of slow
economic growth. If home prices and sales activity decline in one or more of
the markets in which we operate, our costs may not decline at all or at the
same rate and profits may be reduced.
Because almost all of our customers require mortgage financing, increases in
interest rates could impair the affordability of our homes, lower demand for
our products, limit our marketing effectiveness, and limit our ability to
fully realize our backlog.
5
Virtually all of our customers finance their acquisitions through lenders
providing mortgage financing. Increases in interest rates or decreases in
availability of mortgage financing could lower demand for new homes because of
the increased monthly mortgage costs to potential home buyers. Even if
potential customers do not need financing, changes in interest rates and
mortgage availability could make it harder for them to sell their existing
homes to potential buyers who need financing. This could prevent or limit our
ability to attract new customers as well as our ability to fully realize our
backlog because our sales contracts generally include a financing contingency.
Financing contingencies permit the customer to cancel his obligation in the
event mortgage financing at prevailing interest rates, including financing
arranged or provided by us, is unobtainable within the period specified in the
contract. This contingency period is typically four to eight weeks following
the date of execution.
In addition, we believe that the availability of FNMA, FHLMC, FHA and VA
mortgage financing is an important factor in marketing many of our homes. Any
limitations or restrictions on the availability of those types of financing
could reduce our sales.
Homebuilders are subject to a number of federal, local, state and foreign laws
and regulations concerning the development of land, the homebuilding process
and protection of the environment, which can cause us to incur delays, costs
associated with compliance and prohibit or restrict activity in some regions
or areas.
We are subject to extensive and complex regulations that affect the
development of land and the homebuilding process, including zoning, density
and building standards. These regulations often provide broad discretion to
the administering governmental authorities. This can delay or increase the
cost of development or homebuilding.
We are also subject to a variety of local, state, federal and foreign
laws 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, may cause us to incur substantial compliance, remediation, and/or
other costs, and can prohibit or severely restrict development and
homebuilding activity in certain environmentally sensitive regions or areas.
It can be anticipated that increasingly stringent requirements will be
imposed on developers and homebuilders in the future. Although we cannot
predict the effect of these requirements, they could result in time-consuming
and expensive compliance programs and in substantial expenditures, which could
cause delays and increase our cost of operations. In addition, the continued
effectiveness of permits already granted or approvals already obtained is
dependent upon many factors, some of which are beyond our control, such as
changes in policies, rules and regulations and their interpretation and
application.
We compete on several levels with homebuilders that may have greater sales and
financial resources, which could hurt future earnings.
We compete not only for home buyers, but also for desirable properties,
financing, raw materials and skilled labor often within larger subdivisions
designed, planned and developed by other homebuilders. In addition, resales of
homes and the availability of rental housing provide additional competition.
Our competitors include other local, regional and national homebuilders, some
of which have greater sales and financial resources.
These competitive conditions in the homebuilding industry could result
in:
o difficulty in acquiring suitable land at acceptable prices;
o increased selling incentives;
o lower sales; or
o delays in construction.
Any of these problems could increase costs and/or lower profit margins.
We may have difficulty in obtaining the additional financing required to
operate and develop our business.
Our operations require significant amounts of cash, and we will be
required to seek additional capital, whether from sales of equity or borrowing
more money, for the future growth and development of our business. The terms
or availability of additional capital is uncertain. Moreover, the indentures
for our outstanding debt contain provisions that may restrict the debt
6
we may incur in the future. If we are not successful in obtaining sufficient
capital, it could reduce our sales and may hinder our future growth and
results of operations.
Our future growth may include additional acquisitions that may not be
successfully integrated and may not achieve expected benefits.
Although we have not recently announced any acquisitions or mergers
(other than the Washington Homes merger, which closed on January 23, 2001) in
the future we may acquire other businesses. As a result of these acquisitions,
we may need to integrate product lines, dispersed operations and distinct
corporate cultures. Future integration efforts may not succeed or may distract
our management from operating our existing business. Additionally, we may not
be able to enhance our earnings as a result of future acquisitions. Our
failure to successfully manage future acquisitions could harm our operating
results.
An active trading market may not develop for the securities offered hereby.
The securities offered hereby, other than the Class A Common Stock, will
be a new issue of securities and when offered, there may not be an active
public trading market for them. We do not intend to apply for listing of the
securities offered hereby on a security exchange, however, the Class A Common
Stock is already traded on the New York Stock Exchange. The liquidity of the
trading market in the securities offered hereby, and the market prices quoted
for these securities, may be adversely affected by changes in the overall
market for these types of securities and by changes in our financial
performance or prospects or in the prospects for companies in our industry
generally. As a consequence, when issued, an active trading market may not
develop for the securities offered hereby, other than the Class A Common
Stock, you might not be able to sell your securities, other than the Class A
Common Stock, or, even if you can sell your securities, you might not be able
to sell them at an acceptable price.
Federal and state laws allow courts, under specific circumstances, to void
guarantees and to require you to return payments received from guarantors.
The debt securities of Hovnainan offered hereby may be guaranteed by, and
the debt securities of K. Hovnanian offered hereby may be further guaranteed
by, the subsidiaries of Hovnanian. Although you may be direct creditors of any
guarantors by virtue of any guarantee, existing or future creditors of any
guarantor could avoid or subordinate that guarantor's guarantee under the
fraudulent conveyance laws if they were successful in establishing that:
7
o the guarantee was incurred with fraudulent intent; or
o the guarnator did not receive fair consideration or reasonably
equivalent value for issuing its guarantee and
o was insolvent at the time of the guarantee;
o was rendered insolvent by reason of the guarantee;
o was engaged in a business or transaction for which its assets
constituted unreasonably small capital to carry on its
business; or
o intended to incur, or believed that it would incur, debt beyond
its ability to pay such debt as it matured.
The measurers of insolvency for purposes of determining whether a
fraudulent conveyance occurred vary depending upon the laws of the relevant
jurisdiction and upon the valuation assumptions and methodology applied by the
court. Generally, however, a company would be considered insolvent for
purposes of the above if:
o the sum of the company's debts, including contingent, unliquidated
and unmatured liabilities, is greater than all of that company's
property at a fair valuation, or
o if the present fair saleable value of the company's assets is less
than the amount that will be required to pay the probable liability
on its existing debts as they become absolute and matured.
RATIOS OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
For purposes of computing the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred dividends, earnings consist
of earnings (loss) from continuing operations before income taxes, minority
interest, extraordinary items and cumulative effect of accounting changes,
plus fixed charges, which consist of interest charges and preferred share
dividend requirements of subsidiaries, adjusted to a pretax basis, less
interest capitalized, less preferred share dividend requirements of
subsidiaries adjusted to a pretax basis and less undistributed earnings of
affiliates whose debt is not guaranteed by Hovnanian.
The following table sets forth the ratios of earnings to fixed charges
and earnings to combined fixed charges and preferred dividends for Hovnanian
for the periods indicated:
Six Months
Ended
April 30, Years Ended October 31,
---------- ----------------------------------------------------------
2001 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ----
Ratio of earnings to fixed 2.3 2.2 3.0 2.5 (a) 1.6
charges....................
Ratio of earnings to
combined fixed charges and 2.3 2.2 3.0 2.5 (a) 1.6
preferred stock dividends..
(a) No ratio is presented for the year ended October 31, 1997 as the
earnings for such period were insufficient to cover fixed charges by
$9,197,000.
8
USE OF PROCEEDS
Unless otherwise provided in the applicable prospectus supplement, the
net proceeds from the sale of the securities offered by this prospectus and
each prospectus supplement, the "offered securities", will be used for general
corporate purposes, which may include working capital needs, the refinancing
of existing indebtedness, expansion of the business and acquisitions.
Hovnanian will not receive any net proceeds from the sale of any shares of
Class A Common Stock offered by the Selling Shareholders.
SELLING SHAREHOLDERS
Some or all of the shares of Class A Common Stock of Hovnanian being
offered pursuant to this prospectus may be offered by selling shareholders.
Identification of any selling shareholders will be made in the applicable
prospectus supplement. The potential selling shareholders include Kevork S.
Hovnanian, Chairman of the Board and Director of Hovnanian and, until July
1997, Chief Executive Officer of Hovnanian, Ara K. Hovnanian, President and
Director of Hovnanian and, since July 1997, Chief Executive Officer of
Hovnanian, Geaton A. DeCesaris, Jr., until January 2001, Director and Chief
Operating Officer and President of Homebuilding Operations of Washington
Homes, Inc., a corporation that merged with and into a wholly owned subsidiary
of Hovnanian in January 2001, and, since January 2001, Director of Hovnanian
and Chief Operating Officer and President of Homebuilding Operations of K.
Hovnanian, Geaton A. DeCesaris, Sr., until January 2001, Director and Chairman
Emeritus of the Board of Directors of Washington Homes, and Anthony Hugo
DeCesaris, until January 2001, Vice President and Maryland Division President
for Washington Homes and, since January 2001, Vice President and Maryland
Division President of Hovnanian.
The following table sets forth as of June 30, 2001, the Class A Common
Stock and Class B Common Stock of the Hovnanian beneficially owned by each
potential Selling Shareholder. The amount, if any, of Class A Common Stock to
be offered by the Selling Shareholders and the amount and percentage of Class
A Common Stock to be owned by the Selling Shareholders following such offering
will be disclosed in the applicable prospectus supplement.
Class A Common Stock Class B Common Stock
-------------------- --------------------
Amount and Amount and
Nature of Nature of
Beneficial Percent of Beneficial Percent of
Ownership(1)(2) Class(3) Ownership(1)(2) Class(3)
Kevork S. Hovnanian(4)(6).......................... 5,490,887 26.2% 5,843,837 78.1%
Ara K. Hovnanian(5)................................ 1,422,707 6.8% 1,121,596 15.0%
Geaton A. DeCesaris, Jr.(7)(8)(9) ................. 1,262,748 6.0% ----------- -----------
Geaton A. DeCesaris, Sr. (7)(10) .................. 355,860 1.7% ----------- -----------
A. Hugo DeCesaris(7)(11) .......................... 186,309 0.9% ----------- -----------
Total............................................ 9,033,834 41.6% 6,965,433 93.1%
(1) Beneficial ownership is determined in accordance with the rules of the
Commission and generally attributes ownership to persons who have voting
or investment power with respect to the relevant securities. Shares of
Common Stock subject to options either currently exercisable or
exercisable within 60 days are deemed outstanding for computing the
percentage of the person holding such options but are not deemed
outstanding for computing the percentage of any other person. Except as
indicated by these footnotes, and subject to community property laws
where applicable, the persons named in the table have sole voting and
investment power with respect to all Class A Common Stock shown as
beneficially owned by them.
(2) The figures in the table in respect of Class A Common Stock do not
include the shares of Class B Common Stock beneficially owned by the
specified persons, which shares of Class B Common Stock are convertible
at any time on a share for a share basis to Class A Common Stock. The
figures in the table represent beneficial ownership (including ownership
of options, currently exercisable or exercisable within 60 days) and
sole voting power and sole investment power except as noted in notes (4)
through (11) below.
(3) Based upon the number of shares outstanding plus options for such
shareholder.
(4) Includes 167,812 shares of Class A Common Stock and 320,012 shares of
Class B Common Stock as to which Kevork S. Hovnanian has shared voting
power and shared investment power.
(5) Includes 35,217 shares of Class A Common Stock and 89,667 shares of
Class B Common Stock as to which Ara K. Hovnanian has shared voting power
and shared investment power.
(6) Includes 2,829,413 shares of Class B Common Stock held by the Kevork S.
Hovnanian Family Limited Partnership, a Connecticut limited partnership
(the "Limited Partnership"), beneficial ownership of which is disclaimed
by Kevork S. Hovnanian. Kevork S. Hovnanian's wife, Sirwart Hovnanian,
as trustee of the Sirwart Hovnanian 1994 Marital Trust, is the Managing
General Partner of the Limited Partnership and as such has the sole
power to vote and dispose of the Shares of Class B Common Stock held by
the Limited Partnership. Also includes 129,562 shares of Class A Common
Stock and 264,562 shares of Class B Common Stock held in trust for Mr.
Hovnanian's daughter over which Sirwart Hovnanian, as trustee, shares
with her daughter the power to dispose of and vote. In addition,
includes 18,250 shares of Class A Common Stock and 55,450 shares of
Class B Common Stock held in trust for Mr. Hovnanian's grandchildren,
over which Sirwart Hovnanian, as trustee, has sole power to dispose of
and vote and includes 20,000
9
shares of Class A Common Stock held in the name of Sirwart Hovnanian
over which she has sole power to dispose of and vote. Mr. Hovnanian
disclaims beneficial ownership of the shares described in the preceding
three sentences.
(7) Includes shares held jointly with their respective spouses, in part as
follows: Geaton A. DeCesaris, Jr. and Josephine A.
DeCesaris 942,530; Geaton A. Decsaris, Sr. and Elizabeth H. DeCesaris
52,394; A. Hugo DeCesaris and Julie P. DeCesaris 147,865.
(8) Includes 51,435 shares of Class A Common Stock held by The DeCesaris
Foundation Inc. (the "Foundation"), beneficial ownership of which is
disclaimed by Geaton A. DeCesaris, Jr. Geaton A. DeCesaris, Jr.'s wife,
Josephine A. DeCesaris, is President of the Foundation and his children
make up the board of directors.
(9) Includes 102,870 shares held by The Geaton and Josephine DeCesaris
Family Trust, 10,729 shares held by Five Queens, Inc., a subchapter S
corporation owned by Geaton A. DeCesaris, Jr.'s children and of which he
is the President and 10,286 shares held as custodian for Geaton A.
DeCesaris, Jr.'s minor children.
(10) Includes 303,466 shares held by The DeCesaris Family GRAT trust.
(11) Includes 34,969 shares held as custodian for family members.
10
DESCRIPTION OF DEBT SECURITIES
The K. Hovnanian debt securities will be unsecured senior, senior
subordinated or subordinated debt of K. Hovnanian, will be guaranteed by
Hovnanian, may be guaranteed by other subsidiaries of Hovnanian and will be
issued:
o in the case of K. Hovnanian Senior Debt Securities, under a Senior
Indenture, the "K. Hovnanian Senior Debt Indenture", among K.
Hovnanian, Hovnanian, as guarantor, and the trustee specified in the
applicable prospectus supplement;
o in the case of K. Hovnanian Senior Subordinated Debt Securities,
under a Senior Subordinated Indenture, the "K. Hovnanian Senior
Subordinated Debt Indenture", among K. Hovnanian, Hovnanian, as
guarantor, and the trustee specified in the applicable prospectus
supplement; and
o in the case of K. Hovnanian Subordinated Debt Securities, under a
Subordinated Indenture, the "K. Hovnanian Subordinated Debt
Indenture", among K. Hovnanian, Hovnanian, as guarantor, and the
trustee specified in the applicable prospectus supplement.
The K. Hovnanian Senior Debt Indenture, the K. Hovnanian Senior Subordinated
Debt Indenture and the K. Hovnanian Subordinated Debt Indenture are sometimes
referred to in this description individually as a "K. Hovnanian Indenture" and
collectively as the "K. Hovnanian Indentures".
The Hovnanian debt securities may be issued either separately, or
together with, upon conversion of or in exchange for other securities. The
Hovnanian debt securities will be unsecured senior, senior subordinated or
subordinated debt of Hovnanian, may be guaranteed by subsidiaries of Hovnanian
and will be issued:
o in the case of Hovnanian Senior Debt Securities, under a Senior
Indenture, the "Hovnanian Senior Debt Indenture", between Hovnanian
and the trustee specified in the applicable prospectus supplement;
o in the case of Hovnanian Senior Subordinated Debt Securities, under
a Senior Subordinated Indenture, the "Hovnanian Senior Subordinated
Debt Indenture", between Hovnanian and the trustee specified in the
applicable prospectus supplement; and
o in the case of Hovnanian Subordinated Debt Securities, under a
Subordinated Indenture, the "Hovnanian Subordinated Debt Indenture",
between Hovnanian and the trustee specified in the applicable
prospectus supplement.
The Hovnanian Senior Debt Indenture, The Hovnanian Senior Subordinated Debt
Indenture and the Hovnanian Subordinated Debt Indenture are sometimes referred
to in this document individually as a "Hovnanian Indenture" and collectively
as the "Hovnanian Indentures". The K. Hovnanian Senior Indenture and the
Hovnanian Senior Indenture are sometimes collectively referred to individually
as a "Senior Debt Indenture" and collectively as the "Senior Debt Indentures".
The K. Hovnanian Senior Subordinated Debt Indenture and the Hovnanian Senior
Subordinated Debt Indenture are sometimes referred to individually as a
"Senior Subordinated Debt Indenture" and collectively as the "Senior
Subordinated Debt Indentures". The K. Hovnanian Subordinated Debt Indenture
and the Hovnanian Subordinated Debt Indenture are sometimes referred to
individually as a "Subordinated Debt Indenture" and collectively as the
"Subordinated Debt Indentures". The K. Hovnanian Indentures and the Hovnanian
Indentures are sometimes referred to individually as an "Indenture" and
collectively as the "Indentures".
None of the Indentures limits the amount of debt securities that may be
issued thereunder, and the Indentures provide that the debt securities may be
issued from time to time in one or more series. The Indentures permit the
appointment of a different trustee for each series of debt securities. The
Indentures are filed as exhibits to the registration statement, of which this
prospectus is a part. The following summaries of selected provisions of the
Indentures and the debt securities do not purport to be complete, and, while
Hovnanian and K. Hovnanian believe the descriptions of the material provisions
of the Indentures and debt securities contained in this prospectus are
accurate summaries of those material provisions, these summaries are subject
to the detailed provisions of the applicable Indenture to which we refer for a
full description of those provisions, including the definition of some terms.
Section references in parentheses below are to sections in each Indenture
unless otherwise indicated. Wherever particular sections or defined terms of
the applicable Indenture are referred to, those sections or defined terms are
incorporated herein by reference as part of the statement made, and the
statement is qualified in its entirety by the reference. The Indentures are
substantially identical, except for provisions relating to Hovnanian's
guarantee
11
and to subordination. For purposes of the summaries set forth below, "issuer"
shall refer to K. Hovnanian in the case of the K. Hovnanian Debt Securities
and the K. Hovnanian Indentures and to Hovnanian in the case of the Hovnanian
Debt Securities and the Hovnanian Indentures. Obligors refers to Hovnanian in
the case of the Hovnanian Debt Securities and the Hovnanian Indentures, and K.
Hovnanian and Hovnanian, as guarantor, the "guarantor", in the case of the K.
Hovnanian Debt Securities and the K. Hovnanian Indentures.
Provisions Applicable to Senior, Senior Subordinated and Subordinated Debt
Securities
General. Hovnanian debt securities will be unsecured senior, senior
subordinated or subordinated obligations of Hovnanian and K. Hovnanian debt
securities will be unsecured senior, senior subordinated or subordinated
obligations of K. Hovnanian, except that, under specified circumstances, K.
Hovnanian may be released from these obligations. See "Condition for Release
of K. Hovnanian." Except as described in the applicable prospectus supplement,
none of the Indentures limits the payment of dividends by or the acquisition
of stock of Hovnanian or K. Hovnanian. Except to the extent described in any
prospectus supplement, the Indentures do not, and the debt securities will
not, contain any covenants or other provisions that are intended to afford
holders of the debt securities special protection in the event of either a
change of control of Hovnanian or a highly leveraged transaction by Hovnanian.
We refer to the prospectus supplement for the following terms of and
information relating to the debt securities being offered, the "Offered Debt
Securities", to the extent these terms are applicable to Offered Debt
Securities:
o the title of the Offered Debt Securities;
o classification as K. Hovnanian Senior Debt Securities, K. Hovnanian
Senior Subordinated Debt Securities, K. Hovnanian Subordinated Debt
Securities, Hovnanian Senior Debt Securities, Hovnanian Senior
Subordinated Debt Securities or Hovnanian Subordinated Debt
Securities, aggregate principal amount, purchase price and
denomination, and whether the Offered Debt Securities will be
guaranteed by the Subsidiary Guarantors of Hovnanian as described
under "Description of Guarantees" below;
o the date or dates on which the Offered Debt Securities will mature;
o the method by which amounts payable in respect of principal,
premium, if any, or interest, if any, on or upon the redemption of
the Offered Debt Securities may be calculated;
o the interest rate or rates, or the method by which it will be
determined, and the date or dates from which the interest, if any,
will accrue;
o the date or dates on which the interest, if any, will be payable;
o the place or places where and the manner in which the principal of,
premium, if any, and interest, if any, on the Offered Debt
Securities will be payable and the place or places where the Offered
Debt Securities may be presented for transfer;
o the right, if any, or obligation, if any, of Hovnanian or K.
Hovnanian to redeem, repay or purchase the Offered Debt Securities
pursuant to any sinking fund or analogous provisions or at the
option of a holder thereof, and the period or periods within which,
the price or prices or the method by which such price or prices will
be determined, or both at which, the form or method of payment
therefor if other than in cash and the terms and conditions upon
which the Offered Debt Securities will be redeemed, repaid or
purchased pursuant to the obligation;
o the terms for conversion or exchange, if any, of the Offered Debt
Securities;
o any provision relating to the issuance of the Offered Debt
Securities at an original issue discount;
o if the amounts of payments of principal of, premium, if any, and
interest, if any, on the Offered Debt Securities are to be
determined with reference to an index, the manner in which those
amounts will be determined;
o any applicable United States federal income tax consequences;
12
o the currency or currencies for which the Offered Debt Securities may
be purchased and the currency or currencies in which principal,
premium, if any, and interest, if any, may be payable;
o the trustee with respect to the series of Offered Debt Securities;
and
o any other specific terms of the Offered Debt Securities, including
any deleted, modified or additional Events of Default or remedies or
additional covenants provided with respect to the Offered Debt
Securities, and any terms that may be required by or advisable under
applicable laws or regulations.
Unless otherwise specified in any prospectus supplement, the debt
securities will be issuable in registered form and in denominations of $1,000
and any integral multiple thereof, see Section 2.7. No service charge will be
made for any transfer or exchange of any debt securities but the issuer may
require payment of a sum sufficient to cover any tax or other governmental
charge, payable in connection therewith, see Section 2.8.
Debt securities may bear interest at a fixed rate or a floating rate.
Debt securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate may be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to discounted debt securities or to some debt
securities issued at par that are treated as having been issued at a discount
for United States federal income tax purposes will be described in the
applicable prospectus supplement.
In determining whether the holders of the requisite aggregate principal
amount of outstanding debt securities of any series have given any request,
demand, authorization, direction, notice, consent or waiver under the
Indentures, the principal amount of any series of debt securities originally
issued at a discount from their stated principal amount that will be deemed to
be outstanding for such purposes will be the amount of the principal thereof
that would be due and payable as of the date of the determination upon a
declaration of acceleration of the maturity thereof.
Description of Guarantees. Hovnanian will fully and unconditionally
guarantee, pursuant to the K. Hovnanian Indentures, the due and prompt payment
of the principal of and premium, if any, and interest on the K. Hovnanian Debt
Securities when and as the same shall become due and payable, whether at the
stated maturity, by declaration of acceleration, call for redemption or
otherwise. Debt securities of Hovnanian may be guaranteed by, and debt
securities of K. Hovnanian may be further guaranteed by, the subsidiaries of
Hovnanian, the "subsidiary guarantees", that also guaranty Hovnanian's
revolving credit agreement at the time of issuance of the debt securities, the
"subsidiary guarantors". Under the terms of Hovnanian's revised revolving
credit agreement, which is expected to close by the end of August 2001, the
subsidiary guarantors consist of all of Hovnanian's subsidiaries other than
certain subsidiaries formerly engaged in the issuance of collateralized
mortgage obligations, Hovnanian's mortgage lending and title subsidiaries, a
subsidiary holding and licensing the Hovnanian trade name and certain joint
ventures with third-party partners in which Hovnanian's aggregate consolidated
investment as of April 30, 2001 was less than $10,000,000. If debt securities
are guaranteed by subsidiary guarantors, that guarantee will be set forth in a
supplemental indenture.
Payments with respect to the guarantee of the K. Hovnanian Senior
Subordinated Debt Securities and K. Hovnanian Subordinated Debt Securities
will be subordinated in right of payment to the prior payment in full of all
Senior Indebtedness of the guarantor to the same extent and manner that
payments with respect to the K. Hovnanian Senior Subordinated Debt Securities
and K. Hovnanian Subordinated Debt Securities are subordinated in right of
payment to the prior payment in full of all Senior Indebtedness of the issuer
as described under "Provisions Applicable Solely to Senior Subordinated Debt
Securities and Subordinated Debt Securities" below. Likewise, payments with
respect to subsidiary guarantees of Senior Subordinated Debt Securities and
Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of each such subsidiary
guarantor to the same extent and manner that payments with respect to the
Senior Subordinated Debt Securities and Subordinated Debt Securities are
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness of the issuer of such debt securities.
Global Securities. The debt securities of a series may be issued in whole
or in part in the form of one or more global securities, the "global
securities", that will be deposited with or on behalf of a depositary, "the
depositary", identified in the prospectus supplement relating to such series.
Global securities may be issued only in fully registered form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for the individual debt securities represented thereby, a global
security:
o may not be transferred except as a whole; and
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o may only be transferred
o by the depositary for the global security to its nominee,
o by a nominee of the depositary to the depositary or another
nominee of the depositary; or
o by the depositary or any nominee to a successor depositary or
nominee of the successor depositary, see Section 2.8.
The specific terms of the depositary arrangement with respect to a series
of debt securities will be described in the prospectus supplement relating to
such series. Hovnanian and K. Hovnanian anticipate that the following
provisions generally will apply to all depositary arrangements.
Upon the issuance of a global security, the depositary for that global
security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the individual debt
securities represented by that global security to the accounts of persons that
have accounts with such depositary. Those accounts will be designated by the
dealers, underwriters or agents with respect to those debt securities or by
the issuer if the debt securities are offered and sold directly by the issuer.
Ownership of beneficial interests in a global security will be limited to
persons that have accounts with the applicable depositary, participants, or
persons that may hold interests through participants. Ownership of beneficial
interests in a global security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the applicable
depositary or its nominee, with respect to interests of participants, and the
records of participants, with respect to interests of persons other than
participants. The laws of some states require that certain purchasers of
securities take physical delivery of these securities in definitive form.
These limits and laws may impair the ability to transfer beneficial interests
in a global security.
As long as the depositary for a global security or its nominee is the
registered owner of the global security, the depositary or its nominee, as the
case may be, will be considered the sole owner or holder of the debt
securities of the series represented by that global security for all purposes
under the Indenture governing those debt securities. Except as provided below,
owners of beneficial interests in a global security will not be entitled to
have any of the individual debt securities of the series represented by the
global security registered in their names, will not receive or be entitled to
receive physical delivery of any of those debt securities in definitive form
and will not be considered the owners or holders thereof under the Indenture
governing those debt securities.
Payment of principal of, premium, if any, and interest, if any, on
individual debt securities represented by a global security registered in the
name of a depositary or its nominee will be made to the depositary or its
nominee, as the case may be, as the registered owner of the global security
representing the debt securities. Hovnanian and K. Hovnanian expect that the
depositary for a series of debt securities or its nominee, upon receipt of any
payment of principal, premium, if any, and interest, if any, in respect of a
global security representing any of those debt securities, will immediately
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the global security
for those securities as shown on the records of such depositary or its
nominee. Hovnanian and K. Hovnanian also expect that payments by participants
to owners of beneficial interests in the global security held through the
participants will be governed by standing instructions and customary
practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." These payments will
be the responsibility of the participants. Neither Hovnanian, K. Hovnanian,
the trustee for such debt securities, any paying agent nor the registrar for
the debt securities will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of the global security for the debt securities or for maintaining,
supervising or reviewing any records relating to beneficial ownership
interests.
If the depositary for a series of debt securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the issuer within 90 days, the issuer will
issue individual debt securities of the applicable series in exchange for the
global security representing the applicable series of debt securities. In
addition, an issuer may at any time and in its sole discretion, subject to any
limitations described in the prospectus supplement relating to such debt
securities, determine not to have any debt securities of a series represented
by a global security and, in such event, will issue individual debt securities
of the applicable series in exchange for the global security representing the
applicable series of debt securities. Further, if an issuer so specifies with
respect to the debt securities of a series, an owner of a beneficial interest
in a global security representing debt securities of that series may, on terms
acceptable to the issuer, the trustee and the depositary for the global
security, receive individual debt securities of the applicable series in
exchange for beneficial interests,
14
subject to any limitations described in the prospectus supplement relating to
the debt securities. In this instance, an owner of a beneficial interest in a
global security will be entitled to physical delivery of individual debt
securities of the series represented by the applicable global security equal
in principal amount to the beneficial interest and to have the debt securities
registered in its name. Individual debt securities of the series so issued
will be issued in registered form and in denominations, unless otherwise
specified in the applicable prospectus supplement relating to that series of
debt securities, of $1,000 and integral multiples thereof.
Events of Default. Unless otherwise specified in the applicable
prospectus supplement, an Event of Default is defined under each Indenture
with respect to the debt securities of any series issued under the applicable
Indenture as being:
o default in the payment of principal of or premium, if any, with
respect to debt securities of the applicable series when due;
o default in the payment of any installment of interest on any of the
debt securities of that series when due, continued for 30 days;
o default in the payment or satisfaction of any sinking fund or other
purchase obligation with respect to debt securities of that series
when due;
o default in the performance of any other covenant of any of the
Obligors' applicable to debt securities of that series, continued
for 90 days after written notice to the Obligors by the trustee or
to the Obligors and the trustee, by the holders of at least 25% in
aggregate principal amount of the debt securities of that series
then outstanding requiring the same to be remedied; and
o specified events of bankruptcy, insolvency or reorganization of the
issuer, see Section 5.1.
If any Event of Default shall occur and be continuing, the trustee or the
holders of not less than 25% in aggregate principal amount of the debt
securities of that series then outstanding, by notice in writing to the
Obligors, and to the trustee, if given by the holders, may declare the
principal, or, in the case of any series of debt securities originally issued
at a discount from their stated principal amount, the portion of the principal
amount as may be specified in the terms of that series, of all of the debt
securities of that series and the interest, if any, accrued thereon to be due
and payable immediately. The declaration described in the preceding sentence
may be rescinded by notice in writing to the Obligors and the trustee by
holders of a majority in aggregate principal amount of the debt securities of
the series then outstanding. This rescission will rescind and annul any
declaration made pursuant to the first sentence of this paragraph and its
consequences if all defaults under such Indenture are cured or waived, see
Section 5.1.
Each Indenture provides that no holder of any series of debt securities
then outstanding may institute any suit, action or proceeding with respect to,
or otherwise attempt to enforce, that Indenture, unless
o the holder previously gave the trustee written notice of default and
of the continuance thereof;
o the holders of not less than 25% in aggregate principal amount of
the applicable series of debt securities then outstanding made
written request to the trustee to institute the suit, action or
proceeding and offered to the trustee reasonable indemnity as it may
require with respect thereto; and
o the trustee, for 60 days after its receipt of the notice, request
and offer of indemnity, neglected or refused to institute any
action, suit or proceeding;
Subject to the subordination provisions applicable to the Senior Subordinated
Debt Securities and the Subordinated Debt Securities, the right, described in
the above bullet points, of any holder of any debt security to receive payment
of the principal of, premium, if any, or interest, if any, on that debt
security, on or after the respective due dates, or to institute suit for the
enforcement of any payment shall not be impaired or affected without the
consent of the holder, see Section 5.4.
The holders of a majority in aggregate principal amount of the debt securities
of the series 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 the trustee with respect to the
debt securities of that series, provided that the trustee may decline to
follow that
15
direction if the trustee determines that the action or proceeding is unlawful
or would involve the trustee in personal liability, see Section 5.7.
The Obligors are required to furnish annually to the trustee a
certificate as to compliance by the Obligors with all conditions and covenants
under each Indenture, see Section 4.3.
Discharge and Defeasance. Unless otherwise specified in the applicable
prospectus supplement, the Obligors can discharge or defease their respective
obligations with respect to any series of debt securities as described below,
see Article Ten.
The Obligors may discharge all of their obligations, except those
described below, to holders of any series of debt securities issued under any
Indenture that have not already been delivered to the trustee for cancellation
and that have either become due and payable, or are by their terms due and
payable within one year or scheduled for redemption within one year, by
irrevocably depositing with the trustee cash or U.S. Government Obligations,
as defined in the Indenture, or a combination thereof, as trust funds in an
amount certified to be sufficient to pay when due the principal of, premium,
if any, and interest, if any, on all outstanding debt securities of that
series and to make any mandatory sinking fund payments, if any, thereon when
due.
Unless otherwise provided in the applicable prospectus supplement, the
Obligors may also elect at any time to defease and be discharged from all of
their obligations, except those described below, to holders of any series of
debt securities issued under each Indenture, "defeasance", or be released from
all of their obligations with respect to specified covenants applicable to any
series of debt securities issued under each Indenture, "covenant defeasance",
if, among other things:
o the Obligors irrevocably deposit with the trustee cash or U.S.
Government Obligations, or a combination thereof, as trust funds in
an amount certified to be sufficient to pay when due the principal
of, premium, if any, and interest, if any, on all outstanding debt
securities of the applicable series and to make any mandatory
sinking fund payments, if any, thereon when due and those funds have
been so deposited for 91 days;
o the deposit will not result in a breach or violation of, or cause a
default under, any agreement or instrument to which any of the
Obligors is a party or by which it is bound; and
o the Obligors deliver to the trustee an opinion of counsel to the
effect that the holders of the applicable series of debt securities
will not recognize income, gain or loss for United States federal
income tax purposes as a result of the defeasance or covenant
defeasance and that defeasance or covenant defeasance will not
otherwise alter the United States federal income tax treatment of
the holders' principal of and interest payments, if any, on that
series of debt securities.
In the case of defeasance, the opinion must be based on a ruling of the
Internal Revenue Service or a change in United States federal income tax law
occurring after the date of the Indenture relating to the debt securities of
such series, because this result would not occur under current tax law, see
Section 10.1.
Notwithstanding the foregoing, no discharge, defeasance or covenant
defeasance described above will affect the following obligations to, or rights
of, the holders of any series of debt securities:
o rights of registration of transfer and exchange of debt securities
of the applicable series;
o rights of substitution of mutilated, defaced, destroyed, lost or
stolen debt securities of the applicable series;
o rights of holders of debt securities of the applicable series to
receive payments of principal thereof, premium, if any; and
interest, if any, thereon, upon the original due dates therefore,
but not upon acceleration, and to receive mandatory sinking fund
payments thereon when due, if any;
o rights, obligations, duties and immunities of the trustee;
o rights of holders of debt securities of a series as beneficiaries
with respect to property so deposited with the trustee payable to
all or any of them; and
16
o obligations of the Obligors to maintain an office or agency in
respect of debt securities of the series, see Section 10.1.
The Obligors may exercise the defeasance option with respect to any
series of debt securities notwithstanding the prior exercise of the covenant
defeasance option with respect to any series of debt securities. If the
Obligors exercise the defeasance option with respect to any series of debt
securities, payment of that series of debt securities may not be accelerated
because of an Event of Default with respect to that series of debt securities.
If the Obligors exercise the covenant defeasance option with respect to any
series of debt securities, payment of that series of debt securities may not
be accelerated by reason of an Event of Default with respect to the covenants
to which such covenant defeasance is applicable. However, if acceleration were
to occur by reason of another Event of Default, the realizable value at the
acceleration date of the cash and U.S. Government Obligations in the
defeasance trust could be less than the principal of, premium, if any, and
interest, if any, and any mandatory sinking fund payments, if any, then due on
the series of debt securities, in that the required deposit in the defeasance
trust is based upon scheduled cash flow rather than market value, which will
vary depending upon interest rates and other factors.
Modification of the Indenture. Each Indenture provides that the Obligors
and the trustee may enter into supplemental indentures without the consent of
the holders of the debt securities to:
o evidence the assumption by a successor entity of the obligations of
any of the Obligors under that Indenture,
o add covenants or new events of default for the protection of the
holders of the debt securities,
o cure any ambiguity or correct any inconsistency in the Indenture;
o establish the form and terms of debt securities of any series;
o evidence the acceptance of appointment by a successor trustee;
o in the case of Senior Debt Securities, secure those debt securities;
o designate a bank or trust company other than the trustee specified
in the applicable prospectus supplement to act as trustee for a
series of debt securities;
o modify the existing covenants and events of default solely in
respect of, or add new covenants and events of default that apply
solely to, debt securities not yet issued and outstanding on the
date of the supplemental indenture;
o provide for the issuance of debt securities of any series in coupon
form and exchangeability of those debt securities for fully
registered debt securities;
o modify, eliminate or add to the provisions of the Indenture as
necessary to effect the qualification of the Indenture under the
Trust Indenture Act of 1939 and to add provisions expressly
permitted by that Act; and
o modify the provisions to provide for the denomination of debt
securities in foreign currencies that will not adversely affect the
interests of the holders of the debt securities in any material
respect, see Section 8.1.
Each Indenture also contains provisions permitting the Obligors and the
trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of debt securities of each series then outstanding
and affected, to add any provisions to, or change in any manner or eliminate
any of the provisions of, the applicable Indenture or any supplemental
indenture or modify in any manner the rights of the holders of the debt
securities of that series; provided that the Obligors and the trustee may not,
without the consent of the holder of each outstanding debt security affected
thereby:
o extend the stated final maturity of any debt security, reduce the
principal amount thereof, reduce the rate or extend the time of
payment of interest, if any, thereon, reduce or alter the method of
computation of any amount payable on redemption, repayment or
purchase by the issuer, change the coin or currency in which
principal, premium, if any, and interest, if any, are payable,
reduce the amount of the principal of any original issue discount
security payable upon acceleration or provable in bankruptcy, impair
or affect the right to institute suit for the enforcement of any
payment or repayment thereof or, if applicable, adversely affect any
right of prepayment at the option of the holder or, in the case of
K. Hovnanian Indentures, make any change adverse to the interests of
the holders in the terms and conditions of the guarantee; or
17
o reduce the stated percentage in aggregate principal amount of debt
securities of any series issued under the Indenture, see Section
8.2.
Consolidation, Merger, Sale or Conveyance. Except as otherwise provided
in the applicable prospectus supplement, the K. Hovnanian Indentures provide
that K. Hovnanian or the guarantor may, and the Hovnanian Indentures provide
that Hovnanian may, without the consent of the holders of debt securities,
consolidate with, merge into or transfer, exchange or dispose of all of its
properties to, any other corporation or partnership organized under the laws
of the United States, provided that:
o the successor corporation assumes all obligations of K. Hovnanian or
Hovnanian, as the case may be, by supplemental indenture
satisfactory in form to the applicable trustee executed and
delivered to that trustee, under the Indentures and the debt
securities,
o immediately after giving effect to the consolidation, merger,
exchange or other disposition, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event
of Default, will have occurred and be continuing; and
o certain other conditions are met, see Section 9.1.
Condition for Release of K. Hovnanian. Except as otherwise provided in a
prospectus supplement, each K. Hovnanian Indenture provides that K. Hovnanian
may be released from its obligations under the K. Hovnanian Indenture and the
K. Hovnanian debt securities, without the consent of the holders of the K.
Hovnanian debt securities of any series, if Hovnanian or any successor to
Hovnanian has assumed the obligations of K. Hovnanian under those K. Hovnanian
Debt Securities. In the event of the release, a taxable sale or exchange of a
debt security for a new debt security will be deemed to occur. As a result, a
holder of a debt security may recognize gain or loss on the sale or exchange
and may be required to include in income different amounts during the
remaining term of the debt security than would have been included absent the
release.
Certain Definitions. Except as otherwise provided in a prospectus
supplement, the definitions listed below are applicable to the discussions of
the Indentures, see Article One.
"Consolidated Net Tangible Assets" means the aggregate amount of assets
included on the most recent consolidated balance sheet of Hovnanian and its
Restricted Subsidiaries, less applicable reserves and other properly
deductible items and after deducting therefrom all current liabilities and all
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, all in accordance with generally accepted
accounting principles consistently applied.
"Indebtedness," with respect to any person, means, without duplication:
o the principal of, premium, if any, and interest, if any, on
indebtedness for money borrowed of that person, indebtedness of that
person evidenced by bonds, notes, debentures or similar obligations,
and any guaranty by that person of any indebtedness for money
borrowed or indebtedness evidenced by bonds, notes, debentures or
similar obligations of any other person, whether the indebtedness or
guaranty is outstanding on the date of the Indenture or is
thereafter created, assumed or incurred;
o obligations of that person for the reimbursement of any Obligor on
any letter of credit, banker's acceptance or similar credit
transaction;
o the principal of and premium, if any, and interest, if any, on
indebtedness incurred, assumed or guaranteed by that person in
connection with the acquisition by it or any of its subsidiaries of
any other businesses, properties or other assets;
o lease obligations of that person capitalized in accordance with
Statement of Financial Accounting Standards No. 13 promulgated by
the Financial Accounting Standards Board or other generally accepted
accounting principles as may be from time to time in effect;
o any indebtedness of that person representing the balance deferred
and unpaid of the purchase price of any property or interest
therein, except any balance that constitutes an accrued expense or
trade
18
payable and any guaranty, endorsement or other contingent obligation
of that person in respect of any indebtedness of another that is
outstanding on the date of the Indenture or is thereafter created,
assumed or incurred by, that person;
o obligations of that person under interest rate, commodity or
currency swaps, caps, collars, options and similar arrangements; and
o any amendments, modifications, refundings, renewals or extensions of
any indebtedness or obligation described as Indebtedness in the
above bullet points.
"Restricted Subsidiary" means any Subsidiary of Hovnanian other than an
Unrestricted Subsidiary, and any Subsidiary of Hovnanian that was an
Unrestricted Subsidiary but which, subsequent to the date of the Indentures,
is designated by the board of directors of Hovnanian to be a Restricted
Subsidiary; provided, however, that Hovnanian may not designate any Subsidiary
to be a Restricted Subsidiary if Hovnanian would thereby breach any covenant
or agreement contained in the Indentures, on the assumptions that any
Outstanding Indebtedness of the Subsidiary was incurred at the time of the
designation.
"Subsidiary" of any specified Person means any corporation of which that
Person, or that Person and one or more Subsidiaries of that Person, or any one
or more Subsidiaries of that Person, directly or indirectly own voting
securities entitling any one or more of that Person and its Subsidiaries to
elect a majority of the directors, either at all times, or so long as there is
no default or contingency which permits the holders of any other class or
classes of securities to vote for the election of one or more directors.
"Unrestricted Subsidiary" means:
o any Subsidiary of Hovnanian acquired or organized after the date of
the Indentures, provided, however, that this Subsidiary shall not be
a successor, directly or indirectly, to any Restricted Subsidiary;
and
o any Subsidiary of Hovnanian substantially all the assets of which
consist of stock or other securities of a Subsidiary or Subsidiaries
of the character described in clause the above bullet point, unless
and until that Subsidiary is designated to be a Restricted
Subsidiary.
Provisions Applicable Solely to Senior Debt Securities
General. Senior Debt Securities will be issued under a Senior Debt
Indenture and will rank pari passu with all other unsecured and unsubordinated
debt of the issuer of such Senior Debt Securities. At April 30, 2001,
Hovnanian had an aggregate of $99,747,000 of Indebtedness outstanding, which
would be subordinated to Senior Debt Securities.
Limitations on Liens. The Senior Debt Indentures provide that, so long as
any Senior Debt Securities are outstanding, Hovnanian will not, and will not
permit any Restricted Subsidiary to, pledge, mortgage, hypothecate or grant a
security interest in, or permit any mortgage, pledge, security interest or
other lien upon, any property or assets owned by Hovnanian or any Restricted
Subsidiary to secure any Indebtedness, without making effective provision
whereby outstanding Senior Debt Securities will be equally and ratably
secured.
Under the terms of the Senior Debt Indentures, the limitation described
above does not apply to:
o any mortgage, pledge, security interest, lien or encumbrance upon
any property or assets created at the time of the acquisition of
such property or assets by Hovnanian or any Restricted Subsidiary or
within one year after that time to secure all or a portion of the
purchase price for the property or assets;
o any mortgage, pledge, security interest, lien or encumbrance upon
any property or assets existing thereon at the time of the
acquisition thereof by Hovnanian or any Restricted Subsidiary,
whether or not the obligations secured thereby are assumed by
Hovnanian or any Restricted Subsidiary;
o any mortgage, pledge, security interest, lien or encumbrance upon
any property or assets, whenever acquired, of any corporation or
other entity that becomes a Restricted Subsidiary after the date of
the Senior Debt Indenture, provided that
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1) the instrument creating the mortgage, pledge, security
interest, lien or encumbrance was in effect prior to the time
the corporation or other entity becomes a Restricted
Subsidiary, and
2) the mortgage, pledge, security interest, lien or encumbrance
will only apply to properties or assets owned by the
corporation or other entity at the time it becomes a Restricted
Subsidiary or thereafter acquired by it from sources other than
Hovnanian or another Restricted Subsidiary;
o any mortgage, pledge, security interest, lien or encumbrance in
favor of Hovnanian or any wholly-owned Subsidiary of Hovnanian;
o any mortgage, pledge, security interest, lien or encumbrance created
or assumed by Hovnanian or a Restricted Subsidiary in connection
with the issuance of debt securities the interest on which is
excludable from gross income of the holder of the security pursuant
to the Internal Revenue Code of 1986, as amended, for the purpose of
financing, in whole or in part, the acquisition or construction of
property or assets to be used by Hovnanian or a Subsidiary;
o any extension, renewal or refunding of any mortgage, pledge,
security interest, lien or encumbrance described in the bullet
points above on substantially the same property or assets
theretofore subject thereto;
o any mortgage, pledge, security interest, lien or encumbrance
securing any Indebtedness in an amount which, together with all
other Indebtedness secured by a mortgage, pledge, security interest,
lien or encumbrance that is not otherwise permitted by the foregoing
provisions, does not at the time of the incurrence of the
Indebtedness so secured exceed 20% of Consolidated Net Tangible
Assets;
o deposits or pledges to secure the payment of workmen's compensation,
unemployment insurance or other social security benefits or
obligations, or to secure the performance of trade contracts,
leases, public or statutory obligations, surety or appeal bonds or
other obligations of a like general nature incurred in the ordinary
course of business;
o mechanics', materialmen's, warehousemen's, carriers' or other like
liens arising in the ordinary course of business securing
obligations that are not overdue for a period longer than 30 days or
that are being contested in good faith by appropriate proceedings;
o liens for taxes, assessments or other governmental charges not yet
payable or being contested in good faith and as to which adequate
reserves will have been established in accordance with generally
accepted accounting principles;
o non-recourse mortgages on Income Producing Properties securing
Indebtedness;
o liens on assets of a Mortgage Subsidiary to secure only a Warehouse
Line of Credit provided to that Subsidiary;
o easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business; or
o liens in connection with capital leases or sale leaseback
transactions not securing any other indebtedness.
For the purpose of this "Limitation on Liens" provision, "security interest"
will include the interest of the lessor under a lease with a term of three
years or more that should be, in accordance with generally accepted accounting
principles, recorded as a capital lease and any lease of property or assets
not acquired from Hovnanian or any Restricted Subsidiary in contemplation of
that lease will be treated as though the lessee had purchased the property or
assets from the lessor, see Section 3.6 of the Senior Debt Indentures.
Provisions Applicable Solely to Senior Subordinated Debt Securities and
Subordinated Debt Securities
Subordination. The Subordinated Debt Securities will be subordinate and
junior in right of payment, to the extent described in the Subordinated Debt
Indentures, to all Senior Indebtedness. The Senior Subordinated Debt
Securities will be
20
subordinate and junior in right of payment, to the extent described in the
Senior Subordinated Debt Indentures, to all Senior Indebtedness of the
Obligor. The Senior Subordinated Debt Securities will rank senior to all
existing and future Indebtedness of the Obligor that is neither Senior
Indebtedness of the Obligor nor Senior Subordinated Indebtedness and only
Indebtedness of the Obligor that is Senior Indebtedness of the Obligor will
rank senior to the Senior Subordinated Debt Securities in accordance with the
subordination provisions of the Senior Subordinated Debt Indentures.
"Senior Indebtedness" of the Obligor is defined in the Subordinated Debt
Indentures and the Senior Subordinated Debt Indentures as Indebtedness of the
Obligor outstanding at any time, other than the Indebtedness evidenced by the
debt securities of any series, except:
o any Indebtedness as to which, by the terms of the instrument
creating or evidencing the same, it is provided that the
Indebtedness is not senior or prior in right of payment to the debt
securities or is pari passu or subordinate by its terms in right of
payment to the debt securities;
o renewals, extensions and modifications of any such Indebtedness;
o any Indebtedness of the Obligor to a wholly-owned Subsidiary of the
Obligor;
o interest accruing after the filing of a petition initiating certain
events of bankruptcy or insolvency unless that interest is an
allowed claim enforceable against the Obligor in a proceeding under
federal or state bankruptcy laws; and
o trade payables.
"Senior Subordinated Indebtedness" is defined in the Hovnanian Senior
Subordinated Debt Indenture as the Hovnanian Senior Subordinated Debt
Securities and any other Indebtedness of Hovnanian that ranks pari passu with
the Hovnanian Senior Subordinated Debt Securities. Any Indebtedness of
Hovnanian that is subordinate or junior by its terms in right of payment to
any other Indebtedness of Hovnanian will be subordinate to Senior Subordinated
Indebtedness of Hovnanian unless the instrument creating or evidencing the
same or pursuant to which the same is outstanding specifically provides that
this Indebtedness is to rank pari passu with other Senior Subordinated
Indebtedness of Hovnanian and is not subordinated by its terms to any
Indebtedness of Hovnanian that is not Senior Indebtedness of Hovnanian.
"Senior Subordinated Indebtedness" is defined in the K. Hovnanian Senior
Subordinated Debt Indenture as the K. Hovnanian Senior Subordinated Debt
Securities, the guarantee and any other Indebtedness of K. Hovnanian or the
guarantor that ranks pari passu with the K. Hovnanian Senior Subordinated Debt
Securities. Any Indebtedness of K. Hovnanian or the guarantor that is
subordinate or junior by its terms in right of payment to any other
Indebtedness of K. Hovnanian or the guarantor will be subordinate to Senior
Subordinated Indebtedness unless the instrument creating or evidencing the
same or pursuant to which the same is outstanding specifically provides that
such Indebtedness will rank pari passu with other Senior Subordinated
Indebtedness and is not subordinated by its terms to any Indebtedness of K.
Hovnanian or the guarantor, which is not Senior Indebtedness of K. Hovnanian
or Senior Indebtedness of the gurantor.
"Subordinated Indebtedness" of the Obligors means the Senior Subordinated
Debt Securities, the guarantees, any other Senior Subordinated Indebtedness of
that Obligor and any other Indebtedness that is subordinate or junior in right
of payment to Senior Indebtedness of that Obligor.
If:
o the Obligor should default in the payment of any principal of,
premium, if any, or interest, if any, on any Senior Indebtedness of
the Obligor when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration of
acceleration or otherwise or
o any other default with respect to Senior Indebtedness of the Obligor
occurs and the maturity of the Senior Indebtedness has been
accelerated in accordance with its terms, then, upon written notice
of the default to the Obligor by the holders of the Senior
Indebtedness or any trustee therefor, unless and until the default
is cured or waived or has ceased to exist or the acceleration has
been rescinded, no direct or indirect payment, in cash, property or
securities, by set-off or otherwise, will be made or agreed to be
made for principal of, premium, if any, or interest, if any, on any
of the Senior Subordinated Debt Securities or the Subordinated Debt
Securities, or in respect of any redemption, retirement, purchase or
other acquisition of the Senior Subordinated Debt Securities or the
Subordinated Debt
21
Securities other than those made in capital stock of Hovnanian, or
cash in lieu of fractional shares thereof, see Sections 13.1 and
13.4 of the Senior Subordinated Debt Indentures and Sections 13.1
and 13.4 of the Subordinated Debt Indentures.
If any default, other than a default described in the bullet points
directly above, occurs under the Senior Indebtedness of the Obligor, pursuant
to which the maturity thereof may be accelerated immediately or the expiration
of any applicable grace periods occurs, a "Senior Nonmonetary Default", then,
upon the receipt by the Obligor and the trustee of written notice thereof, a
"payment notice", from or on behalf of holders of 25% or more of the aggregate
principal amount of Senior Indebtedness specifying an election to prohibit the
payment and other action by the Obligor in accordance with the following
provisions of this paragraph, the Obligor may not make any payment or take any
other action that would be prohibited by the bullet points directly above
during the period, the "payment blockage period" commencing on the date of
receipt of the payment notice and ending on the earlier of
o the date, if any, on which the holders of such Senior Indebtedness
or their representative notify the trustee that the Senior
Nonmonetary Default is cured, waived or ceases to exist or the
Senior Indebtedness to which the Senior Nonmonetary Default relates
is discharged or
o the 179th day after the date of receipt of the payment notice.
Notwithstanding the provisions described in the immediately preceding bullet
points, the Obligor may resume payments on the Senior Subordinated Debt
Securities and the Subordinated Debt Securities after the payment blockage
period.
If
o without the consent of the Obligor a receiver, conservator,
liquidator or trustee of the Obligor or of any of its property is
appointed by the order or decree of any court or agency or
supervisory authority having jurisdiction, and the decree or order
remains in effect for more than 60 days, the Obligor is adjudicated
bankrupt or insolvent, any of its property is sequestered by court
order and that order remains in effect for more than 60 days, or a
petition is filed against the Obligor under any state or federal
bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution, liquidation or receivership law of any
jurisdiction whether now or hereafter in effect, and is not
dismissed within 60 days after such filing;
o the Obligor:
o commences a voluntary case or other proceeding seeking
liquidation, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or other relief
with respect to itself or its debt or other liabilities under
any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it
or any substantial part of its property;
o consents to any such relief or to the appointment of or taking
possession by any of the above officials in an involuntary case
or other proceeding commenced against it;
o fails generally to, or cannot, pay its debts generally as they
become due;
o takes any corporate action to authorize or effect any of the
foregoing; or
o any Subsidiary of the Obligor takes, suffers or permits to exist any
of the events or conditions referred to in any of the above bullet
points,
then all Senior Indebtedness of the Obligor, including any interest thereon
accruing after the commencement of any proceedings, will first be paid in full
before any payment or distribution, whether in cash, securities or other
property, is made by the Obligor to any holder of Senior Subordinated Debt
Securities or Subordinated Debt Securities on account of the principal of,
premium, if any, or interest, if any, on the Senior Subordinated Debt
Securities or Subordinated Debt Securities, as the case may be.
Any payment or distribution, whether in cash, securities or other
property, other than securities of the Obligor or any other corporation
provided for by a plan of reorganization or readjustment the payment of which
is subordinate, at least to the
22
extent provided in the subordination provisions with respect to the
indebtedness evidenced by the Senior Subordinated Debt Securities or the
Subordinated Debt Securities, to the payment of all Senior Indebtedness of the
Obligor then outstanding and to any securities issued in respect thereof under
a plan of reorganization or readjustment, that would otherwise, but for the
subordination provisions, be payable or deliverable in respect of the Senior
Subordinated Debt Securities or the Subordinated Debt Securities of any series
will be paid or delivered directly to the holders of Senior Indebtedness of
the Obligor in accordance with the priorities then existing among such holders
until all Senior Indebtedness of the Obligor, including any interest thereon
accruing after the commencement of proceedings, has been paid in full. In the
event of any proceeding, after payment in full of all sums owing with respect
to Senior Indebtedness of the Obligor, the holders of Senior Subordinated Debt
Securities, together with the holders of any obligations of the Obligor
ranking on a parity with the Senior Subordinated Debt Securities, will be
entitled to be repaid from the remaining assets of the Obligor the amounts at
that time due and owing on account of unpaid principal of, premium, if any, or
interest, if any, on the Senior Subordinated Debt Securities and such other
obligations before any payment or other distribution, whether in cash,
property or otherwise, shall be made on account of any capital stock or
obligations of the Obligor ranking junior to the Senior Subordinated Debt
Securities, including the Subordinated Debt Securities, and such other
obligations, see Section 13.1 of the Senior Subordinated Debt Indentures and
Section 13.1 of the Subordinated Debt Indentures.
If any payment or distribution of any character, whether in cash,
securities or other property, other than securities of the Obligor or any
other corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in the
subordination provisions with respect to the Senior Subordinated Debt
Securities or the Subordinated Debt Securities, to the payment of all Senior
Indebtedness of the Obligor then outstanding and to any securities issued in
respect thereof under the plan of reorganization or readjustment, will be
received by the trustee, or any holder of any Senior Subordinated Debt
Securities or Subordinated Debt Securities in contravention of any of the
terms of the Senior Subordinated Debt Indenture or the Subordinated Debt
Indenture, as the case may be, such payment or distribution of securities will
be received in trust for the benefit of, and will be paid over or delivered
and transferred to, the holders of the Senior Indebtedness of the Obligor then
outstanding in accordance with the priorities then existing among the holders
for application to the payment of all Senior Indebtedness of the Obligor
remaining unpaid to the extent necessary to pay all the Senior Indebtedness of
the Obligor in full, see Section 13.1 of the Senior Subordinated Debt
Indentures and Section 13.1 of the Subordinated Debt Indentures.
By reason of the subordination, in the event of the insolvency of the
Obligor, holders of Senior Indebtedness of the Obligor may receive more,
ratably, than holders of the Senior Subordinated Debt Securities or
Subordinated Debt Securities of the Obligor. Subordination will not prevent
the occurrence of any Event of Default, as defined in the Indentures, or limit
the right of acceleration in respect of the Senior Subordinated Debt
Securities or Subordinated Debt Securities.
Concerning the Trustee
Information concerning the trustee for a series of debt securities will
be set forth in the prospectus supplement relating to that series of debt
securities. Any of the trustees under the Indentures may make loans to
Hovnanian or K. Hovnanian in the normal course of business.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Hovnanian is 100,100,000 shares
consisting of 87,000,000 shares of Class A Common Stock, par value $.01 per
share, 13,000,000 shares of Class B Common Stock, par value $.01 per share,
the "Class B Common Stock", and 100,000 shares of Preferred Stock, par value
$.01 per share, the "Preferred Stock", in the series and with the voting
powers, designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions thereof,
as may be fixed from time to time by the board of directors for each series.
The following summary description of certain provisions of Hovnanian's
Restated Certificate of Incorporation, the "Certificate of Incorporation", and
By-laws does not purport to be complete and is qualified in its entirety by
reference to those provisions.
Common Stock
As of June 1, 2001, 20,450,766 shares of Class A Common Stock and
7,504,007 shares of Class B Common Stock were issued and outstanding. The
Class A Common Stock is traded on the New York Stock Exchange. There is no
established public trading market for the Class B Common Stock. In order to
trade Class B Common Stock, the shares must be converted into Class A Common
Stock on a one-for-one basis. Any offering of common stock made hereby will
consist only of Class A Common Stock. The outstanding Class A Common Stock is,
and any Class A Common Stock offered pursuant to this prospectus and any
prospectus supplement when issued and paid for will be, fully paid and
non-assessable.
23
Dividends. Dividends on the Class A Common Stock will be paid if, when
and as determined by the board of directors of Hovnanian out of funds legally
available for this purpose. Some debt instruments to which Hovnanian is a
party contain restrictions on the payment of cash dividends. At April 30,
2001, approximately $94,944,000 of retained earnings was free of restrictions
on the payment of cash dividends, however Hovnanian was limited to 10,000,000
of dividends in any twelve-month period. Under the terms of Hovnanian's
revised credit facility, which is expected to close by the end of August 2001,
approximately $25,000,000 of retained earnings would have been free of
restrictions on the payment of cash dividends at April 30, 2001. The amount of
any regular cash dividend payable on a share of Class A Common Stock will be
an amount equal to 110% of the corresponding regular cash dividend payable on
a share of Class B Common Stock. Hovnanian has never paid dividends nor does
it currently intend to pay dividends.
Voting Rights. Holders of Class A Common Stock are entitled to one vote
for each share held by them on all matters presented to shareholders. Holders
of Class B Common Stock are entitled to ten votes per share.
Liquidation Rights. After satisfaction of the preferential liquidation
rights of any Preferred Stock, the holders of the Class A Common Stock and
Class B Common Stock are entitled to share ratably as a single class in the
distribution of all remaining net assets.
Preemptive and Other Rights. The holders of Class A Common Stock do not
have preemptive rights as to additional issues of common stock or conversion
rights. The shares of Class A Common Stock are not subject to redemption or to
any further calls or assessments and are not entitled to the benefit of any
sinking fund provisions. The rights, preferences and privileges of holders of
Class A Common Stock are subject to, and may be adversely affected by, the
rights of the holder of shares of any series of Preferred Stock that Hovnanian
may designate and issue in the future.
Preferred Stock
The Certificate of Incorporation authorizes the Board of Directors to
issue from time to time up to 100,000 shares of Preferred Stock, in one or
more series, and with the voting powers, designations, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as may be fixed from time to time by the
board of directors for each series. No shares of Preferred Stock have been
issued and Hovnanian has no present plans to issue any shares of Preferred
Stock. The Preferred Stock, however, could be used by Hovnanian's board of
directors without further action by Hovnanian's stockholders as an
anti-takeover device.
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DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
Hovnanian may issue Stock Purchase Contracts representing contracts
obligating holders to purchase from Hovnanian and Hovnanian to sell to the
holders a specified number of shares of Class A Common Stock or Preferred
Stock at a future date or dates. The price per share of Class A Common Stock
or Preferred Stock may be fixed at the time the Stock Purchase Contracts are
issued or may be determined by reference to a specific formula set forth in
the Stock Purchase Contracts.
The Stock Purchase Contracts may be issued separately or as a part of
units, often known as Stock Purchase Units, consisting of a Stock Purchase
Contract and either
o debt securities, or
o debt obligations of third parties, including U.S. Treasury
securities,
securing the holder's obligations to purchase the Class A Common Stock or
Preferred Stock under the Stock Purchase Contracts. The Stock Purchase
Contracts may require us to make periodic payments to the holders of the Stock
Purchase Units or vice versa, and such payments may be unsecured or prefunded
on some basis. The Stock Purchase Contracts may require holders to secure
their obligations in a specified manner and in certain circumstances we may
deliver newly issued prepaid Stock Purchase Contracts, often known as prepaid
securities, upon release to a holder of any collateral securing each holder's
obligations under the original Stock Purchase Contract.
The applicable prospectus supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units and, if applicable, prepaid
securities. The description in the prospectus supplement will not contain all
of the information that you may find useful. For more information, you should
review the Stock Purchase Contracts, the collateral arrangements and
depositary arrangements, if applicable, relating to such Stock Purchase
Contracts or Stock Purchase Units and, if applicable, the prepaid securities
and the document pursuant to which the prepaid securities will be issued,
which will be filed with the SEC promptly after the offering of such Stock
Purchase Contracts or Stock Purchase Units and, if applicable, prepaid
securities.
25
DESCRIPTION OF WARRANTS
Hovnanian may issue warrants, including warrants to purchase Class A
Common Stock or Preferred Stock and warrants to purchase Hovnanian debt
securities. K. Hovnanian may issue warrants to purchase K. Hovnanian Debt
Securities. All obligations of K. Hovnanian under the K. Hovnanian warrants
will be fully and unconditionally guaranteed by Hovnanian. Warrants may be
issued independently of or together with any other securities and may be
attached to or separate from such securities. Obligations of Hovnanian and K.
Hovnanian under the warrants may be guaranteed by the subsidiary guarantors.
Each series of warrants will be issued under a separate warrant agreement,
each a "warrant agreement" to be entered into between Hovnanian and/or K.
Hovnanian and a warrant agent, the "warrant agent". The warrant agent will act
solely as an agent of Hovnanian and/or K. Hovnanian in connection with the
warrants of that series and will not assume any obligation or relationship of
agency or trust for or with holders or beneficial owners of warrants. The
following describes some general terms and provisions of the warrants offered
hereby. Further terms of the warrants and the applicable warrant agreement
will be described in the applicable prospectus supplement.
The applicable prospectus supplement will describe the following terms,
where applicable, of the warrants in respect of which this prospectus is being
delivered:
o the title of the warrants;
o the aggregate number of the warrants;
o the price or prices at which the warrants will be issued;
o the designation, aggregate principal amount and terms of the
securities purchasable upon exercise of the warrants;
o the designation and terms of the securities with which the warrants
are issued and the number of the warrants issued with each such
security;
o if applicable, the date on and after which the warrants and the
related securities will be separately transferable;
o the price at which the securities purchasable upon exercise of the
warrants may be purchased;
o the date on which the right to exercise the warrants will commence
and the date on which the right will expire;
o the minimum or maximum amount of the warrants that may be exercised
at any one time;
o information with respect to book-entry procedures, if any;
o a discussion of certain United States Federal income tax
considerations; and
o any other terms of the warrants, including terms, procedures and
limitations relating to the exercise of the warrants.
26
PLAN OF DISTRIBUTION
Hovnanian, K. Hovnanian and the selling shareholders may sell the
securities to or through underwriters or dealers, and also may sell the
offered securities directly to one or more other purchasers or through agents.
The applicable prospectus supplement will list the names of any underwriters
or agents involved in the sale of the offered securities and any applicable
commissions or discounts.
Underwriters, dealers or agents may offer and sell the offered securities
at a fixed price or prices, which may be changed, or from time to time at
market prices prevailing at the time of sale, at prices related to the
prevailing market prices or at negotiated prices. In connection with the sale
of the securities, underwriters or agents may be deemed to have received
compensation from Hovnanian, K. Hovnanian or the selling shareholders in the
form of underwriting discounts or commissions and may also receive commissions
from purchasers of the securities for whom they may act as agent. Underwriters
or agents may sell the securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters or commissions from the purchasers for whom they may act as
agent.
The Preferred Stock, debt securities and warrants, when first issued,
will have no established trading market. Any underwriters or agents to or
through whom offered securities are sold by Hovnanian or K. Hovnanian for
public offering and sale may make a market in such offered securities, but the
underwriters or agents will not be obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for any offered securities.
Any underwriters, dealers or agents participating in the distribution of
the offered securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
offered securities may be deemed to be underwriting discounts and commissions
under the Securities Act. Underwriters, dealers or agents may be entitled,
under agreements entered into with Hovnanian, K. Hovnanian or the selling
shareholders, to indemnification against or contribution toward certain civil
liabilities, including liabilities under the Securities Act.
If so indicated in the prospectus supplement, Hovnanian, K. Hovnanian or
the selling shareholders will authorize underwriters or other persons acting
as its agents to solicit offers by certain institutions to purchase securities
from it pursuant to contracts providing for payment and delivery on a future
date. Institutions with which contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases will be
subject to the condition that the purchase of the securities will not at the
time of delivery be prohibited under the laws of the jurisdiction to which
such purchaser is subject. The underwriters and agents will not have any
responsibility in respect of the validity or performance of such contracts.
LEGAL MATTERS
Certain legal matters with respect to the validity of the offered
securities will be passed upon for Hovnanian and K. Hovnanian by Simpson
Thacher & Bartlett, New York, New York. Simpson Thacher & Bartlett will rely,
as to matters of New Jersey law, on the opinion of Peter S. Reinhart, Esq.,
Senior Vice-President and General Counsel for Hovnanian and K. Hovnanian.
Certain legal matters in connection with the offered securities may also be
passed upon for any agents or underwriters by counsel specified in the
prospectus supplement.
EXPERTS
The consolidated financial statements of Hovnanian Enterprises, Inc.
appearing in the Hovnanian's Annual Report (Form 10-K), for the year ended
October 31, 2000, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
27
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses payable by Hovnanian in connection with the offering
described in this registration statement are as follows:
Total(a)
Registration Fee.............................................................................. $75,000
Legal fees and expenses....................................................................... 200,000
Blue Sky fees and expenses.................................................................... 15,000
Accounting fees and expenses.................................................................. 15,000
Printing and duplicating expenses............................................................. 300,000
Miscellaneous expenses........................................................................ 15,000
Total....................................................................................... $620,000
========
(a) All figures, except the SEC registration fee, are estimates.
Item 15. Indemnification of Directors and Officers.
Hovnanian is a Delaware corporation. Section 145 of the General
Corporation Law of the State of Delaware grants each corporation organized
thereunder the power to indemnify any person who is or was a director,
officer, employee or agent of a corporation or enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, other than an action by or in the right of
the corporation, by reason of being or having been in any such capacity, if he
acted in good faith in a manner 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 his conduct was
unlawful. Section 102(b)(7) of the General Corporation Law of the State of
Delaware enables a corporation in its certificate of incorporation or an
amendment thereto validly approved by stockholders to limit or eliminate the
personal liability of the members of its board of directors for violations of
the directors' fiduciary duty of care.
Article EIGHTH of Hovnanian's Restated Certificate of Incorporation
contains the following provisions with respect to indemnification:
No director of the Company shall be personally liable to the Company
or its stockholders for monetary damages for breach of fiduciary duty as
a director; provided, however, that this Article shall not eliminate or
limit the liability of a director (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit. This Article shall not eliminate or
limit the liability of a director for any act or omission occurring prior
to the date on which this Article becomes effective. Any repeal or
modification of this Article Eighth shall not adversely affect any right
or protection of a director of the Company existing hereunder with
respect to any act or omission occurring prior to the time of such repeal
or modification.
Hovnanian maintains a liability insurance policy providing coverage for
its directors and officers in an amount up to an aggregate limit of
$10,000,000 for any single occurrence.
K. Hovnanian is a New Jersey corporation. Subsection 2 of Title 14A,
Section 3-5 of the New Jersey Statutes grants any corporation organized for
any purpose under any general or special law of New Jersey the power to
indemnify a corporate agent against his expenses and liabilities in connection
with any proceeding involving the corporate agent by reason of his being or
having been such a corporate agent, other than a proceeding by or in the right
of the corporation, if (a) such corporate agent acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation; and (b) with respect to any criminal proceeding, such
corporate agent had no reasonable cause to believe his conduct was unlawful.
The termination of any proceeding by judgment, order, settlement, conviction
or upon a plea of nolo contendere or its equivalent does not by itself create
a presumption that the corporate agent did not meet such applicable standards
of conduct. Section 3 of Title 14A, Section 3-5 of the New Jersey Statutes
grants any corporation organized under any general or special law of New
Jersey the power to indemnify a director, officer, employee or agent of a
corporation
II-1
against his expenses in connection with any proceeding by or in the right of
the corporation, which involves him by reason of his having been a corporate
agent, if he acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the corporation. However, no
indemnification shall be provided in respect of any claim, issue or matter in
which the corporate agent shall be adjudged to be liable to the corporation,
unless and only to the extent that the Superior Court or the court in which
the proceeding was brought determines, upon application, that despite the
adjudication of liability, but in view of all circumstances of the case, the
corporate agent is fairly and reasonably entitled to indemnity for expenses
deemed proper by the Superior Court or such other court. Corporations
organized for any purpose under any general or special law of New Jersey shall
indemnify a corporate agent against expenses to the extent that such corporate
agent has been successful on the merits or otherwise in any proceeding
referred to in subsections 2 and 3 of Title 14A, Section 3-5.
Subsection 4 provides that any indemnification under these subsections,
unless ordered by a court under subsection 3, may be made by the corporation
only as authorized in a specific case upon a determination that
indemnification is proper in the circumstances because the corporate agent met
the applicable standard of (a) good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation and
(b) with respect to any criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful. Subsection 5 provides that unless provided
for in the certificate of incorporation or bylaws, such determination shall be
made (a) by the board of directors or a committee thereof, acting by a
majority vote of a quorum consisting of directors who were not parties to or
otherwise involved in the proceeding; or (b) if such quorum is not obtainable,
or even if obtainable and such quorum directs, by written opinion of
independent legal counsel designated by the board of directors; or (c) by the
shareholders if the certificate of incorporation or bylaws or a resolution of
the board of directors or of the shareholders so directs. Subsection 7
provides that if a corporation on application by a corporate agent fails or
refuses to provide indemnification as required or permitted by this section, a
corporate agent may apply to a court for an award of indemnification by the
corporation. This section does not exclude any other rights to which a
corporate agent may be entitled under a certificate of incorporation, bylaw,
agreement, vote of shareholders, or otherwise; provided that no
indemnification is made if a final adjudication adverse to the corporate agent
establishes that his acts or omissions (a) were in breach of his duty of
loyalty to the corporation or its shareholders, as defined under New Jersey
law, (b) were not in good faith or involved a knowing violation of law or (c)
resulted in receipt by the corporate agent of an improper personal benefit.
Except as required by subsection 4, no indemnification shall be made or
expenses advanced by a corporation or shall be ordered by a court if such
action would be inconsistent with a provision of the certificate of
incorporation, a bylaw, a resolution of the board of directors or of the
shareholders, an agreement or other proper corporate action in effect at the
time of the accrual of the alleged cause of action asserted in the proceeding,
which prohibits, limits or otherwise conditions the exercise of
indemnification powers by the corporation or the rights to which a corporate
agent may be entitled.
Item 16. Exhibits.
See Exhibit Index.
Item 17. Undertakings.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the from of prospectus filed with the
Commission pursuant to Rule 462(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
II-2
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrants pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
Hovnanian annual report pursuant to Section 13(a) or 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) 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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions set forth in response to Item 15, or
otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrants of expenses incurred or paid by a
director, officer or controlling person of the Registrants 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 Registrants will, unless in the opinion of their 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 Securities Act and will be governed
by the final adjudication of such issue.
The undersigned Registrants hereby undertake to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under Section 305(b)(2)
of the Act.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Red Bank, State of New Jersey, on
August 28, 2001.
Hovnanian Enterprises, Inc.
By: /s/ J. Larry Sorsby
--------------------------
J. Larry Sorsby
Executive Vice President
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
J. Larry Sorsby and Paul W. Buchanan and each of them, the true and lawful
attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and to
Registration Statements Nos. 333-75939 and 333-51991, including any filings
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to
file the same, with all exhibits thereto, and all other documents in
connection therewith, with the Securities and Exchange Commission, and hereby
grants to such attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and anything necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitute, or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in
the capacities indicated on August 28, 2001.
Signature Title
/s/ Kevork S. Hovnanian Chairman of the Board
- -----------------------------------
Kevork S. Hovnanian
/s/ Ara K. Hovnanian President, Chief Executive Officer
- ----------------------------------- and Director
Ara K. Hovnanian
/s/ Paul W. Buchanan Senior Vice President--Corporate
- ----------------------------------- Controller and Director
Paul W. Buchanan
/s/ Geaton A. DeCesaris, Jr President of Homebuilding Operations
- ----------------------------------- and Chief Operating Officer
Geaton A. DeCesaris, Jr. and Director
/s/ Arthur M. Greenbaum
- ----------------------------------- Director
Arthur M. Greenbaum
/s/ Desmond P. McDonald
- ----------------------------------- Director
Desmond P. McDonald
/s/ Peter S. Reinhart Senior Vice-President,
- ----------------------------------- General Counsel/Secretary and Director
Peter S. Reinhart
- ----------------------------------- Director
John J. Robbins
/s/ J. Larry Sorsby Executive Vice President,
- ----------------------------------- Chief Financial Officer
J. Larry Sorsby and Director
/s/ Stephen D. Weinroth
- ----------------------------------- Director
Stephen D. Weinroth
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, K. Hovnanian
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Red Bank, State of New Jersey, on August 28, 2001.
K. HOVNANIAN ENTERPRISES, INC.
By: /s/ J. Larry Sorsby
--------------------
J. Larry Sorsby
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
J. Larry Sorsby and Paul W. Buchanan and each of them, the true and lawful
attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and to
Registration Statements Nos. 333-75939 and 333-51991, including any filings
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to
file the same, with all exhibits thereto, and all other documents in
connection therewith, with the Securities and Exchange Commission, and hereby
grants to such attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and anything necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitute, or 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 below by the following persons in the
capacities indicated on August 28, 2001.
Signature Title
/s/ Kevork S. Hovnanian Chairman of the Board
- -----------------------------------
Kevork S. Hovnanian
/s/ Ara K. Hovnanian President, Chief Executive Officer
- ----------------------------------- and Director
Ara K. Hovnanian
/s/ Paul W. Buchanan Senior Vice President--Corporate
- ----------------------------------- Controller and Director
Paul W. Buchanan
/s/ Geaton A. DeCesaris, Jr President of Homebuilding Operations
- ----------------------------------- and Chief Operating
Geaton A. DeCesaris, Jr. Officer and Director
/s/ Peter S. Reinhart Senior Vice-President,
- ------------------------------------ General Counsel/Secretary and Director
Peter S. Reinhart
/s/ J. Larry Sorsby Executive Vice President,
- ------------------------------------ Chief Financial Officer
J. Larry Sorsby and Director
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
each of the Registrants, as listed on the attached Schedule of Subsidiary
Registrants, has duly caused this Registration Statement to be signed on its
behalf by the undersigned, in his capacity as set forth on the attached
Schedule of Subsidiary Registrants, thereunto duly authorized, in the City of
Red Bank, State of New Jersey, on August 28, 2001
REGISTRANTS (as listed on the attached Schedule of
Subsidiary Registrants)
By: /s/ J. Larry Sorsby
--------------------------------------------
J. Larry Sorsby
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
J. Larry Sorsby and Paul W. Buchanan and each of them, the true and lawful
attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and to
Registration Statements Nos. 333-75939 and 333-51991, including any filings
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to
file the same, with all exhibits thereto, and all other documents in
connection therewith, with the Securities and Exchange Commission, and hereby
grants to such attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and anything necessary to be
done, as fully to all intents and purposes as the undersigned might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, or their or his substitute, or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following person on the date and
in the capacities indicated on August 28, 2001.
Signature Title
/s/ Kevork S. Hovnanian Chairman of the Board
- -----------------------------------
Kevork S. Hovnanian
/s/ Ara K. Hovnanian Vice Chairman of the Board
- -----------------------------------
Ara K. Hovnanian
/s/ Paul W. Buchanan Senior Vice President--Corporate
- ----------------------------------- Controller and Director
Paul W. Buchanan
/s/ Geaton A. DeCesaris, Jr President of Homebuilding Operations
- ----------------------------------- and Chief Operating
Geaton A. DeCesaris, Jr. Officer and Director
/s/ Peter S. Reinhart Senior Vice-President,
- ------------------------------------- General Counsel/Secretary and Director
Peter S. Reinhart
/s/ J. Larry Sorsby Executive Vice President,
- ------------------------------------ Chief Financial Officer
J. Larry Sorsby and Director
II-7
SCHEDULE OF SUBSIDIARY REGISTRANTS
Exact Name of Registrant As Specified In Its Charter
All Seasons, Inc.
Arrow Properties, Inc.
Ballantrae Development Corp.
Ballantrae Home Sales, Inc.
Ballantrae Marina, Inc.
Condominium Community (Bowie New Town), Inc.
Condominium Community (Largo Town), Inc.
Condominium Community (Park Place), Inc.
Condominium Community (Quail Run), Inc.
Condominium Community (Truman Drive), Inc.
Consultants Corporation
Designed Contracts, Inc.
Dryer Associates, Inc.
Eastern National Title Insurance Agency, Inc.
Eastern Title Agency, Inc.
EXC, Inc.
Fortis Finance, Inc.
Fortis Homes, Inc.
Fortis Title, Inc.
Founders Title Agency, Inc.
Governor's Abstract Co., Inc.
Hexter Fair Land Title Company I Inc.
Homebuyer's Mortgage, Inc.
Housing-Home Sales, Inc.
Hovnanian at Tarpon Lakes I, Inc.
Hovnanian Developments of Florida, Inc.
Hovnanian Financial Services I, Inc.
Hovnanian Financial Services II, Inc.
Hovnanian Financial Services III, Inc.
Hovnanian Financial Services IV, Inc.
Hovnanian Pennsylvania, Inc.
Hovnanian Properties of Atlantic County, Inc.
Jersey City Danforth CSO, Inc.
II-8
K. Hov International, Inc.
K. Hovnanian Acquisitions, Inc.
K. Hovnanian at Ashburn Village, Inc.
K. Hovnanian at Atlantic City, Inc.
K. Hovnanian at Estates, Inc.
K. Hovnanian at Barrington, Inc.
K. Hovnanian at Bedminster II, Inc.
K. Hovnanian at Bedminster, Inc.
K. Hovnanian at Belmont, Inc.
K. Hovnanian at Bernards II, Inc.
K. Hovnanian at Bernards III, Inc.
K. Hovnanian at Bernards IV, Inc.
K. Hovnanian at Branchburg I, Inc.
K. Hovnanian at Branchburg II, Inc.
K. Hovnanian at Branchburg III, Inc.
K. Hovnanian at Bridgeport, Inc.
K. Hovnanian at Bridgewater II, Inc.
K. Hovnanian at Bridgewater IV, Inc.
K. Hovnanian at Bridgewater V, Inc.
K. Hovnanian at Bridgewater VI, Inc.
K. Hovnanian at Bull Run, Inc.
K. Hovnanian at Burlington III, Inc.
K. Hovnanian at Burlington, Inc.
K. Hovnanian at Calabria, Inc.
K. Hovnanian at Cameron Chase, Inc.
K. Hovnanian at Carmel Del Mar, Inc.
K. Hovnanian at Carolina Country Club I, Inc.
K. Hovnanian at Carolina Country Club II, Inc.
K. Hovnanian at Carolina Country Club III, Inc.
K. Hovnanian at Castile, Inc.
K. Hovnanian at Cedar Grove I, Inc.
K. Hovnanian at Cedar Grove II, Inc.
K. Hovnanian at Chaparral, Inc.
K. Hovnanian at Clarkstown, Inc.
K. Hovnanian at Coconut Creek, Inc.
K. Hovnanian at Crestline, Inc.
K. Hovnanian at Crystal Springs, Inc.
II-9
K. Hovnanian at Dominguez, Inc.
K. Hovnanian at Dominion Ridge, Inc.
K. Hovnanian at East Brunswick V, Inc.
K. Hovnanian at East Brunswick VI, Inc.
K. Hovnanian at East Brunswick VIII, Inc.
K. Hovnanian at East Whiteland I, Inc.
K. Hovnanian at Exeter Hills, Inc.
K. Hovnanian at Fair Lakes Glen, Inc.
K. Hovnanian at Fair Lakes, Inc.
K. Hovnanian at Freehold Township, Inc.
K. Hovnanian at Freehold Township I, Inc.
K. Hovnanian at Ft. Myers I, Inc.
K. Hovnanian at Ft. Myers II, Inc.
K. Hovnanian at Great Notch, Inc. (formally K. Hovnanian at Berlin,
Inc.)
K. Hovnanian at Hackettstown, Inc.
K. Hovnanian at Half Moon Bay, Inc.
K. Hovnanian at Hampton Oaks, Inc.
K. Hovnanian at Hanover, Inc.
K. Hovnanian at Hershey's Mill, Inc. (a PA Corp)
K. Hovnanian at Highland Vineyards, Inc.
K. Hovnanian at Holly Crest, Inc.
K. Hovnanian at Hopewell IV, Inc.
K. Hovnanian at Hopewell V, Inc.
K. Hovnanian at Hopewell VI, Inc.
K. Hovnanian at Horizon Heights, Inc.
K. Hovnanian at Howell Township, Inc.
K. Hovnanian at Howell Township II, Inc.
K. Hovnanian at Hunter Estates, Inc.
K. Hovnanian at Jacksonville II, Inc.
K. Hovnanian at Jefferson, Inc.
K. Hovnanian at Jersey City I, Inc.
K. Hovnanian at Jersey City II, Inc.
K. Hovnanian at Jersey City III, Inc.
K. Hovnanian at Kings Grant I, Inc.
K. Hovnanian at Klockner Farms, Inc.
K. Hovnanian at La Terraza, Inc.
II-10
K. Hovnanian at La Trovata, Inc.
K. Hovnanian at Lakewood, Inc.
K. Hovnanian at Lawrence V, Inc.
K. Hovnanian at Lawrence Square, Inc.
K. Hovnanian at Locust Grove I, Inc.
K. Hovnanian at Lower Saucon II, Inc.
K. Hovnanian at Lower Saucon, Inc.
K. Hovnanian at Mahwah II, Inc.
K. Hovnanian at Mahwah IV, Inc. (Whalepond)
K. Hovnanian at Mahwah IX, Inc.
K. Hovnanian at V, Inc.
K. Hovnanian at Mahwah VI, Inc. (Norfolk)
K. Hovnanian at Mahwah VII, Inc.
K. Hovnanian at Mahwah VIII, Inc.
K. Hovnanian at Manalapan II, Inc.
K. Hovnanian at Manalapan, Inc.
K. Hovnanian at Marlboro Township II, Inc.
K. Hovnanian at Marlboro Township IV, Inc.
K. Hovnanian of Marlboro Township VI, Inc.
K. Hovnanian of Marlboro Township VII, NJ
K. Hovnanian at Marlboro, III
K. Hovnanian at Medford I, Inc.
K. Hovnanian at Merrimack, Inc.
K. Hovnanian of Metro DC South, Inc.
K. Hovnanian at Montclair NJ, Inc.
K. Hovnanian at Montclair, Inc.
K. Hovnanian at Montgomery I, Inc.
K. Hovnanian at Montville II, Inc.
K. Hovnanian at Montville, Inc.
K. Hovnanian at Newark I, Inc.
K. Hovnanian at Newark Urban Renewal Corporation I, Inc.
K. Hovnanian at Newark Urban Renewal Corporation IV, Inc.
K. Hovnanian at Newark Urban Renewal Corporation V, Inc.
K. Hovnanian at North Brunswick II, Inc.
K. Hovnanian at North Brunswick III, Inc.
II-11
K. Hovnanian at North Brunswick IV, Inc.
K. Hovnanian at Northern Westchester, Inc.
K. Hovnanian at Northlake, Inc.
K. Hovnanian at Ocean Walk, Inc.
K. Hovnanian at P.C. Properties, Inc.
K. Hovnanian at Park Ridge, Inc.
K. Hovnanian at Pasco I, Inc.
K. Hovnanian at Pasco II, Inc.
K. Hovnanian at Peekskill, Inc.
K. Hovnanian at Pembroke Shores, Inc.
K. Hovnanian at Perkiomen I, Inc.
K. Hovnanian at Perkiomen II, Inc.
K. Hovnanian at Plainsboro I, Inc.
K. Hovnanian at Plainsboro II, Inc.
K. Hovnanian at Plainsboro III, Inc.
K. Hovnanian at Polo Trace, Inc.
K. Hovnanian at Port Imperial North, Inc.
K. Hovnanian Properties of East Brunswick II, Inc.
K. Hovnanian at Princeton, Inc.
K. Hovnanian at Rancho Christianitos, Inc.
K. Hovnanian at Raritan I, Inc.
K. Hovnanian at Readington II, Inc.
K. Hovnanian at Reservoir Ridge, Inc.
K. Hovnanian at River Oaks, Inc.
K. Hovnanian at San Sevaine, Inc.
K. Hovnanian at Saratoga, Inc.
K. Hovnanian at Scotch Plains II, Inc.
K. Hovnanian at Scotch Plains, Inc.
K. Hovnanian at Seneca Crossing, Inc.
K. Hovnanian at Smithville, Inc.
K. Hovnanian at Smithville III, Inc.
K. Hovnanian at Somerset VIII, Inc.
K. Hovnanian at South Brunswick II, Inc.
K. Hovnanian at South Brunswick III, Inc.
K. Hovnanian at South Brunswick IV, Inc.
K. Hovnanian at South Brunswick V, Inc.
K. Hovnanian at South Brunswick, Inc.
II-12
K. Hovnanian at Spring Ridge, Inc.
K. Hovnanian at Stone Canyon, Inc.
K. Hovnanian at Stonegate, Inc. (a CA Corporation)
K. Hovnanian at Stonegate, Inc. (a VA Corporation)
K. Hovnanian at Stony Point, Inc.
K. Hovnanian at Stuart Road, Inc.
K. Hovnanian at Sully Station, Inc.
K. Hovnanian at Summerwood, Inc.
K. Hovnanian at Sunsets, L.L.C.
K. Hovnanian at Sycamore, Inc.
K. Hovnanian at Tannery Hill, Inc.
K. Hovnanian at The Bluff, Inc.
K. Hovnanian at The Cedars, Inc.
K. Hovnanian at The Glen, Inc.
K. Hovnanian at the Reserve at Medford, Inc.
K. Hovnanian at Thornbury, Inc.
K. Hovnanian at Tierrasanta, Inc.
K. Hovnanian at Tuxedo, Inc.
K. Hovnanian of Union Township I, Inc.
K. Hovnanian at Upper Freehold Township I, Inc.
K. Hovnanian at Upper Makefield I, Inc.
K. Hovnanian at Upper Merion, Inc.
K. Hovnanian at Vail Ranch, Inc.
K. Hovnanian at Valleybrook II, Inc.
K. Hovnanian at Valleybrook, Inc.
K. Hovnanian at Wall Township II, Inc.
K. Hovnanian at Wall Township IV, Inc.
K. Hovnanian at Wall Township VI, Inc.
K. Hovnanian at Wall Township VII, Inc.
K. Hovnanian at Wall Township VIII, Inc.
K. Hovnanian at Wall Township, Inc.
K. Hovnanian at Washingtonville, Inc.
K. Hovnanian at Wayne III, Inc.
K. Hovnanian at Wayne IV, Inc.
K. Hovnanian at Wayne V, Inc.
K. Hovnanian at Wayne VI, Inc.
K. Hovnanian at Wayne VII, Inc.
II-13
K. Hovnanian at West Orange, Inc.
K. Hovnanian at Wildrose, Inc.
K. Hovnanian at Winston Trails, Inc.
K. Hovnanian at Woodmont, Inc.
K. Hovnanian Aviation, Inc.
K. Hovnanian Companies Northeast, Inc.
K. Hovnanian Companies of California, Inc.
K. Hovnanian Companies of Florida, Inc.
K. Hovnanian Companies of Maryland, Inc.
K. Hovnanian Companies of Metro Washington, Inc.
K. Hovnanian Companies of New York, Inc.
K. Hovnanian Companies of North Carolina, Inc.
K. Hovnanian Companies of Pennsylvania, Inc.
K. Hovnanian Companies of Southern California, Inc.
K. Hovnanian Construction Management, Inc.
K. Hovnanian's Design Gallery, Inc.
K. Hovnanian Developments of California, Inc.
K. Hovnanian Developments of Maryland, Inc.
K. Hovnanian Developments of Metro Washington, Inc.
K. Hovnanian Developments of New Jersey, Inc.
K. Hovnanian Developments of New York, Inc.
K. Hovnanian Developments of Texas, Inc.
K. Hovnanian Enterprises, Inc.
K. Hovnanian Equities, Inc.
K. Hovnanian Florida Division, Inc.
K. Hovnanian Investment Properties of New Jersey, Inc.
K. Hovnanian Investment Properties, Inc.
K. Hovnanian Investments, Inc.
K. Hovnanian Marine, Inc.
K. Hovnanian Mortgage USA, Inc.
K. Hovnanian Mortgage, Inc.
K. Hovnanian North Jersey Acquisitions, L.L.C.
K. Hovnanian Poland, SP .Z.O.O.
K. Hovnanian Port Imperial Urban Renewal, Inc.
K. Hovnanian Properties of East Brunswick, II, Inc.
K. Hovnanian Properties of Franklin, Inc.
K. Hovnanian Properties of Hamilton, Inc.
II-14
K. Hovnanian Properties of Lake Worth, Inc.
K. Hovnanian Properties of NB Theatre, Inc.
K. Hovnanian Properties of Newark Urban Renewal Corporation, Inc.
K. Hovnanian Properties of North Brunswich II, Inc.
K. Hovnanian Properties of North Brunswick V, Inc.
K. Hovnanian Properties of North Center Drive, Inc.
K. Hovnanian Properties of Piscataway, Inc.
K. Hovnanian Properties of Red Bank, Inc.
K. Hovnanian Properties of Route 35, Inc.
K. Hovnanian Properties of Wall, Inc.
K. Hovnanian Real Estate Investment, Inc.
K. Hovnanian Real Estate of Florida, Inc.
K. Hovnanian Southeast Florida, Inc.
K. Hovnanian Southeast Region, Inc.
K. Hovnanian's Four Seasons of the Palm Beaches, Inc.
KHC Acquisition, Inc.
KHL, Inc.
Kings Grant Evesham Corp.
Landarama, Inc.
Matzel & Mumford of Delaware, Inc.
Minerva Group, Inc.
Molly Pitcher Construction Co., Inc.
New K. Hovnanian Developments of Florida, Inc.
Park Village Realty, Inc.
Parthenon Group, Inc.
Pine Brook Co., Inc.
Preston Grande Homes, Inc.
Que Corporation
Reflections of You Interiors, Inc.
Stonebrook Homes, Inc.
The Matzel & Mumford Organization, Inc.
The New Fortis Corporation
The Southampton Corporation
Tropical Service Builders, Inc.
Washington Homes of Delaware, Inc.
Washington Homes of West Virginia, Inc.
II-15
Washington Homes, Inc.
Washington Homes, Inc. of Virginia
Westminster Homes (Charlotte), Inc.
Westminster Homes of Tennessee, Inc.
Westminster Homes, Inc.
WH Land I, Inc.
WH Land II, Inc.
WH Properties, Inc.
Arbor West, L.L.C.
Heritage Pines, L.L.C.
K. Hovnanian at Arbor Heights, L.L.C.
K. Hovnanian at Ashburn Village, L.L.C.
K. Hovnanian at Barnegat I, L.L.C.
K. Hovnanian at Berkeley, L.L.C.
K. Hovnanian at Bernards V, L.L.C.
K. Hovnanian at Blooms Crossing, L.L.C.
K. Hovnanian at Blue Heron Pines, L.L.C.
K. Hovnanian at Brenbrooke, L.L.C.
K. Hovnanian at Carmel Village, L.L.C.
K. Hovnanian at Cedar Grove III, L.L.C.
K. Hovnanian at Chester I, L.L.C.
K. Hovnanian at Clifton, L.L.C.
K. Hovnanian at Columbia Town Center, L.L.C.
K. Hovnanian at Cranbury, L.L.C.
K. Hovnanian at Curries Woods, L.L.C.
K. Hovnanian at Encinitas Ranch, L.L.C.
K. Hovnanian at Guttenberg, L.L.C.
K. Hovnanian at Hamburg, L.L.C.
K. Hovnanian at Hamburg Contractors, L.L.C.
K. Hovnanian at Jackson, L.L.C.
K. Hovnanian at Jersey City IV, L.L.C.
K. Hovnanian at Kent Island, L.L.C.
K. Hovnanian at Kincaid, L.L.C.
K. Hovnanian at King Farm, L.L.C.
K. Hovnanian at LaFayette Estates, L.L.C.
K. Hovnanian at Lake Ridge Crossing, L.L.C.
K. Hovnanian at Lake Terrapin, L.L.C.
II-16
K. Hovnanian at Lawrence V, L.L.C.
K. Hovnanian at Linwood, L.L.C.
K. Hovnanian at Little Egg Harbor, L.L.C.
K. Hovnanian at Little Egg Harbor Contractors, L.L.C.
K. Hovnanian at Lower Moreland I, L.L.C.
K. Hovnanian at Lower Moreland II, L.L.C.
K. Hovnanian at Lower Saucon II, L.L.C.
K. Hovnanian at Mansfield I, LLC
K. Hovnanian at Mansfield II, LLC
K. Hovnanian at Mansfield III, L.L.C.
K. Hovnanian at Marlboro Township VIII, L.L.C.
K. Hovnanian at Marlboro VI, L.L.C.
K. Hovnanian at Marlboro VII, L.L.C.
K. Hovnanian at Menifee, L.L.C.
K. Hovnanian at Middletown, L.L.C.
K. Hovnanian at Mt. Olive Township, L.L.C.
K. Hovnanian at North Brunswick VI, L.L.C.
K. Hovnanian at North Haledon, L.L.C.
K. Hovnanian at Northampton, L.L.C.
K. Hovnanian at Northfield, L.L.C.
K. Hovnanian at Pacific Bluffs, L.L.C.
K. Hovnanian at Paramus, L.L.C.
K. Hovnanian at Park Lane, L.L.C.
K. Hovnanian at Prince William, L.L.C.
K. Hovnanian at Rancho Santa Margarita, L.L.C.
K. Hovnanian at Riverbend, L.L.C.
K. Hovnanian at Roderuck, L.L.C.
K. Hovnanian at Rowland Heights, L.L.C.
K. Hovnanian at Sayreville, L.L.C.
K. Hovnanian at South Amboy, L.L.C.
K. Hovnanian at South Bank, L.L.C.
K. Hovnanian at Spring Hill Road, L.L.C.
K. Hovnanian at St. Margarets, L.L.C.
K. Hovnanian at Sunsets, L.L.C.
K. Hovnanian at the Gables, L.L.C.
K. Hovnanian at Upper Freehold Township I, Inc.
K. Hovnanian at Upper Freehold Township II, Inc.
II-17
K. Hovnanian at Wanaque, L.L.C.
K. Hovnanian at Washington, L.L.C.
K. Hovnanian at Wayne VIII, L.L.C.
K. Hovnanian at West Milford, L.L.C.
K. Hovnanian at West Windsor, L.L.C.
K. Hovnanian at Willow Brook, L.L.C.
K. Hovnanian at Winchester, L.L.C.
K. Hovnanian Central Acquisitions, L.L.C.
K. Hovnanian Companies of Metro D.C. North, L.L.C.
K. Hovnanian North Central Acquisitions, L.L.C.
K. Hovnanian North Jersey Acquisitions, L.L.C.
K. Hovnanian Shore Acquisitions, L.L.C.
K. Hovnanian South Jersey Acquisition, L.L.C.
K. Hovnanian's Four Seasons, L.L.C.
K. Hovnanian's Private Home Portfolio, L.L.C.
Kings Court at Montgomery, L.L.C.
Kings Crossing at Montgomery, L.L.C.
Knox Creek, L.L.C.
M&M at Apple Ridge, L.L.C.
M&M at Brookhill, L.L.C.
M&M at Heritage Woods, L.L.C.
M&M at the Highlands, L.L.C.
McKinley Court, L.L.C.
M&M at Morristown, L.L.C.
M&M at Roosevelt, L.L.C.
M&M at Sheridan, L.L.C.
M&M at Sparta, L.L.C.
M&M at Spinnaker Pointe, L.L.C.
M&M at Spruce Hollow, L.L.C.
M&M at Spruce Meadows, L.L.C.
M&M at Spruce Run, L.L.C.
Matzel & Mumford at Aple Ridge II, L.L.C.
Matzel & Mumford at Basking Ridge, L.L.C.
Matzel & Mumford at Cranbury Knoll, L.L.C.
Matzel & Mumford at Freehold, L.L.C.
Matzel & Mumford at Heritage Landing, L.L.C.
Matzel & Mumford at Montgomery, L.L.C.
II-18
Matzel & Mumford at Phillipsburg, L.L.C.
Matzel & Mumford at Piscataway, L.L.C.
Matzel & Mumford at South Brunswick, L.L.C.
Matzel & Mumford at Tewksbury, L.L.C.
Matzel & Mumford at West Windsor, L.L.C.
Matzel & Mumford at White Oak Estates, L.L.C.
Matzel & Mumford at Willows Pond, L.L.C.
Matzel & Mumford at Woodland Crest, L.L.C.
Monticello Woods, L.L.C.
New Homebuyers Title Co. (Virginia) L.L.C.
New Homebuyers Title Company, L.L.C.
Shadow Creek, L.L.C.
Section 14 of the Hills, L.L.C.
The Landings at Spinnaker Pointe, L.L.C.
Title Group II, L.L.C.
Town Homes at Montgomery, L.L.C.
Westminster Homes of Alabama, L.L.C.
Westminster Homes of Mississippi, L.L.C.
Westwood Hills, L.L.C.
WH/PR Land Co., L.L.C.
Athena Portfolio Investors, L.P.
Beacon Manor Associates, L.P.
Galleria Mortgage, L.P.
Goodman Family Builders, L.P.
Goodman Mortgage Investors, L.P.
M&M Investments, L.P.
Parkway Development
Sovereign Group, L.P.
Washabama, L.P.
II-19
INDEX TO EXHIBITS
Exhibit Description of Exhibits
Number
**1.1 - Underwriting Agreement (Hovnanian Debt Securities and Warrants to
Purchase Hovnanian Debt Securities).
**1.2 - Underwriting Agreement (K. Hovnanian Debt Securities and Warrants
to Purchase K. Hovnanian Debt Securities).
**1.3 - Underwriting Agreement (Equity Securities and Warrants to Purchase
Equity Securities).
**1.4 - Underwriting Agreement (Stock Purchase Contracts).
**1.5 - Underwriting Agreement (Stock Purchase Units).
*4.1 - Form of
Hovnanian Debt Securities.
*4.2 - Form of K. Hovnanian Debt Securities.
4.3 - Form of Hovnanian Senior Debt Indenture (filed herewith).
4.4 - Form of Hovnanian Senior Subordinated Debt Indenture (filed
herewith).
4.5 - Form of Hovnanian Subordinated Debt Indenture (filed herewith).
4.6 - Form of K. Hovnanian Senior Debt Indenture (filed herewith).
4.7 - Form of K. Hovnanian Senior Subordinated Debt Indenture (filed
herewith).
4.8 - Form of K. Hovnanian Subordinated Debt Indenture (filed herewith).
*4.9 - Form of Warrant Agreement for Preferred Stock and Common Stock
(including Form of Warrant Certificate).
*4.10 - Form of Warrant Agreement for Hovnanian Debt Securities (including
form of Warrant Certificate).
*4.11 - Form of Warrant Agreement for K. Hovnanian Debt Securities
(including form of Warrant Certificate).
***5.1 - Opinion of Simpson Thacher & Bartlett.
***5.2 - Opinion of Peter S. Reinhart, Senior Vice-President and General
Counsel of Hovnanian and K. Hovnanian.
12.1 - Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Dividends (filed herewith).
23.1 - Consent of Ernst & Young LLP (filed herewith).
***23.2 - Consent of Simpson Thacher & Bartlett (included in Exhibit 5.1).
***23.3 - Consent of Peter S. Reinhart, Senior Vice-President and General
Counsel of Hovnanian and K. Hovnanian (included in Exhibit 5.2).
24.1 - Powers of Attorney of Board of Directors of Hovnanian (included
on signature page).
24.2 - Powers of Attorney of Board of Directors of K. Hovnanian (included
on signature page).
25.3 - Powers of Attorney of Board of Directors of Subsidiary Registrants
(included on signature page).
25.1 - Statement of Eligibility of Trustee under the Hovnanian Indentures
(filed herewith).
25.2 - Statement of Eligibility of Trustee under the K. Hovnanian
Indentures (filed herewith).
* Incorporated by reference to exhibit of same number to Registration
Statement No. 333-51991.
** To be incorporated by reference, as necessary, as an exhibit to one
or more reports on Form 8-K.
*** To be filed by amendment.
EXHIBIT 4.3
==============================================================================
HOVNANIAN ENTERPRISES, INC.
Issuer
and
SUBSIDIARY GUARANTORS OF HOVNANIAN
Guarantors
and
FIRST UNION NATIONAL BANK,
as Trustee
----------------------------
INDENTURE
Dated as of ___________ ___, 2001
FORM OF SENIOR INDENTURE
==============================================================================
CROSS REFERENCE SHEET*
-----------
Provisions of Trust Indenture Act of 1939 and Indenture to be dated
as of _____ among HOVNANIAN ENTERPRISES, INC., SUBSIDIARY GUARANTORS OF
HOVNANIAN and FIRST UNION NATIONAL BANK, as Trustee:
Section of the Act Section of Indenture
- ------------------ --------------------
310(a)(1), (2) and (5).............................6.9
310(a)(3) and (4)..................................Inapplicable
310(b).............................................6.8 and 6.10(a), (b) and (d)
310(c).............................................Inapplicable
311(a).............................................6.13
311(b).............................................6.13
311(c).............................................Inapplicable
312(a).............................................4.1 and 4.2(a)
312(b).............................................4.2(a) and (b)(i) and (ii)
312(c).............................................4.2(c)
313(a).............................................4.4(a)(i), (ii), (iii),
(iv), (v), (vi) and (vii)
313(a)(5)..........................................Inapplicable
313(b)(1)..........................................Inapplicable
313(b)(2)..........................................4.4(b)
313(c).............................................4.4(c)
313(d).............................................4.4(d)
314(a).............................................4.3
314(b).............................................Inapplicable
314(c)(1) and (2)..................................11.5
314(c)(3)..........................................Inapplicable
314(d).............................................Inapplicable
314(e).............................................11.5
314(f).............................................Inapplicable
315(a), (c) and (d)................................6.1
315(b).............................................5.8
315(e).............................................5.9
316(a)(1)..........................................5.7
316(a)(2)..........................................Not required
316(a)(last sentence)..............................7.4
316(b).............................................5.4
317(a).............................................5.2
317(b).............................................3.5(a)
318(a).............................................11.7
- ---------------------
*This Cross Reference Sheet is not part of the Indenture.
Page
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TABLE OF CONTENTS
ARTICLE One DEFINITIONS......................................................1
SECTION 1.1. Definitions................................................1
ARTICLE Two SECURITIES.......................................................8
SECTION 2.1. Forms Generally............................................8
SECTION 2.2. Form of Trustee's Certificate of Authentication............8
SECTION 2.3. Amount Unlimited, Issuable in Series.......................9
SECTION 2.4. Authentication and Delivery of Securities.................11
SECTION 2.5. Execution of Securities...................................14
SECTION 2.6. Certificate of Authentication.............................15
SECTION 2.7. Denomination and Date of Securities;
Payments of Interest...................................15
SECTION 2.8. Registration, Transfer and Exchange.......................16
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen
Securities.............................................18
SECTION 2.10. Cancellation of Securities; Disposition Thereof..........19
SECTION 2.11. Temporary Securities.....................................19
SECTION 2.12. CUSIP Numbers............................................19
ARTICLE Three COVENANTS.....................................................19
SECTION 3.1. Payment of Principal and Interest.........................19
SECTION 3.2. Offices for Notices and Payments, etc.....................20
SECTION 3.3. No Interest Extension.....................................20
SECTION 3.4. Appointments to Fill Vacancies in Trustee's Office........20
SECTION 3.5. Provision as to Paying Agent..............................20
SECTION 3.6. Limitation on Liens.......................................21
ARTICLE Four SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER,
Hovnanian AND THE TRUSTEE......................................23
SECTION 4.1. Issuer and Hovnanian to Furnish Trustee Information
as to Names and Addresses of Securityholders...........23
SECTION 4.2. Preservation and Disclosure of Securityholders Lists.......24
SECTION 4.3. Reports by the Issuer and Hovnanian........................25
SECTION 4.4. Reports by the Trustee.....................................25
ARTICLE Five REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT............................................26
SECTION 5.1. Events of Default..........................................26
SECTION 5.2. Payment of Securities on Default; Suit Therefor............28
SECTION 5.3. Application of Moneys Collected by Trustee.................29
SECTION 5.4. Proceedings by Securityholders.............................30
SECTION 5.5. Proceedings by Trustee.....................................31
SECTION 5.6. Remedies Cumulative and Continuing.........................31
Page
-----
SECTION 5.7. Direction of Proceedings; Waiver of
Defaults by Majority of Securityholders................31
SECTION 5.8. Notice of Defaults........................................32
SECTION 5.9. Undertaking to Pay Costs..................................32
ARTICLE Six CONCERNING THE TRUSTEE..........................................33
SECTION 6.1. Duties and Responsibilities of the Trustee;
During Default; Prior to Default.......................33
SECTION 6.2. Certain Rights of the Trustee. Subject
to Section 6.1:........................................34
SECTION 6.3. Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds Thereof.......35
SECTION 6.4. Trustee and Agents May Hold Securities;
Collections, etc.......................................35
SECTION 6.5. Moneys Held by Trustee....................................35
SECTION 6.6. Compensation and Indemnification of Trustee
and Its Prior Claim....................................35
SECTION 6.7. Right of Trustee to Rely on Officers'
Certificate, etc.......................................36
SECTION 6.8. Qualification of Trustee; Conflicting Interests...........36
SECTION 6.9. Persons Eligible for Appointment as Trustee;
Different Trustees for Different Series................36
SECTION 6.10. Resignation and Removal; Appointment of
Successor Trustee......................................37
SECTION 6.11. Acceptance of Appointment by Successor Trustee...........38
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee....................................39
SECTION 6.13. Preferential Collection of Claims Against the Issuer.....39
SECTION 6.14. Appointment of Authenticating Agent......................40
ARTICLE Seven CONCERNING THE SECURITYHOLDERS................................41
SECTION 7.1. Evidence of Action Taken by Securityholders...............41
SECTION 7.2. Proof of Execution of Instruments and of
Holding of Securities..................................41
SECTION 7.3. Holders to be Treated as Owners...........................41
SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding.........41
SECTION 7.5. Right of Revocation of Action Taken.......................42
SECTION 7.6. Record Date for Consents and Waivers......................42
ARTICLE Eight SUPPLEMENTAL INDENTURES.......................................43
SECTION 8.1. Supplemental Indentures Without Consent of
Securityholders........................................43
SECTION 8.2. Supplemental Indentures with Consent of Securityholders...44
SECTION 8.3. Effect of Supplemental Indenture..........................46
SECTION 8.4. Documents to Be Given to Trustee..........................46
SECTION 8.5. Notation on Securities in Respect of Supplemental
Indentures.............................................46
ARTICLE Nine CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE
OR OTHER DISPOSITION...........................................46
SECTION 9.1. Consolidation Permitted, etc., on Certain Terms...........46
- ii -
Page
-----
SECTION 9.2. Successor Corporation to be Substituted...................47
SECTION 9.3. Opinion of Counsel to be Given Trustee....................48
ARTICLE Ten LEGAL DEFEASANCE AND COVENANT DEFEASANCE........................48
SECTION 10.1. Applicability of Article.................................48
SECTION 10.2. Legal Defeasance And Discharge...........................48
SECTION 10.3. Covenant Defeasance......................................48
SECTION 10.4. Conditions To Legal Or Covenant Defeasance...............49
SECTION 10.5. Deposited Money And Government Securities To Be
Held In Trust; Other Miscellaneous Provisions.......50
SECTION 10.6. Repayment To Issuer......................................50
SECTION 10.7. Reinstatement............................................51
SECTION 10.8. Survival.................................................51
SECTION 10.9. Satisfaction and Discharge of Indenture..................51
ARTICLE Eleven MISCELLANEOUS PROVISIONS.....................................51
SECTION 11.1. Partners, Incorporators, Stockholders, Officers
and Directors of Issuer Exempt from Individual
Liability..............................................51
SECTION 11.2. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities......................52
SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture......52
SECTION 11.4. Notices and Demands on Issuer, Trustee and
Holders of Securities..................................52
SECTION 11.5. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein......52
SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays..........53
SECTION 11.7. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939..................................53
SECTION 11.8. GOVERNING LAW............................................54
SECTION 11.9. Counterparts.............................................54
SECTION 11.10. Effect of Headings.......................................54
ARTICLE Twelve REDEMPTION OF SECURITIES AND SINKING FUNDS...................54
SECTION 12.1. Applicability of Article.................................54
SECTION 12.2. Notice of Redemption; Partial Redemptions................54
SECTION 12.3. Payment of Securities Called for Redemption..............55
SECTION 12.4. Exclusion of Certain Securities from Eligibility
for Selection for Redemption...........................56
SECTION 12.5. Mandatory and Optional Sinking Funds.....................56
ARTICLE Thirteen GUARANTEES.................................................58
SECTION 13.1. Applicability of Article.................................58
SECTION 13.2. Guarantee................................................58
SECTION 13.3. Obligations of the Guarantor Unconditional...............60
Page
-----
SECTION 13.4. Article 13 Not To Prevent Events of Default..............60
SECTION 13.5. Execution and Delivery of Guarantee......................60
- iv -
FORM OF SENIOR INDENTURE
FORM OF SENIOR INDENTURE, dated as of ____ ___, 2001 among Hovnanian
Enterprises, Inc., a Delaware corporation (the "Issuer" or "Hovnanian"),
Subsidiary Guarantors of Hovnanian and FIRST UNION NATIONAL BANK, as trustee
(the "Trustee").
RECITALS OF THE ISSUER:
WHEREAS, the Issuer has duly authorized the issuance from time to
time of its unsecured debentures, notes or other evidences of indebtedness to
be issued in one or more series (the "Securities") up to such principal amount
or amounts as may from time to time be authorized in accordance with the terms
of this Indenture; and
WHEREAS, the Issuer has duly authorized the execution and delivery of
this Indenture to provide, among other things, for the authentication,
delivery and administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been undertaken and
completed.
RECITALS OF GUARANTORS:
WHEREAS, each Guarantor desires to make the Guarantees provided for
herein; and
WHEREAS, all things necessary to make this Indenture a valid
agreement of each of the Guarantors, in accordance with its terms, have been
done and the Guarantor will do all things necessary to make the Guarantees,
when executed by each of the Guarantors and endorsed on the Securities
authenticated and delivered hereunder, the valid obligations of each Guarantor
as hereinafter provided.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1. Definitions. For all purposes of this Indenture and of
any indenture supplemental hereto the following terms shall have the
respective meanings specified in this Section 1.1 (except as otherwise
expressly provided herein or in any indenture supplemental hereto or unless
the context otherwise clearly requires). All other terms used in this
Indenture that are defined in the Trust Indenture Act of 1939, including terms
defined therein by reference to the Securities Act of 1933, as amended (the
"Securities Act"), shall have the meanings assigned to such terms in said
Trust Indenture Act of 1939 and in the Securities Act as in force at the date
of this Indenture (except as herein otherwise expressly provided herein or in
any indenture supplemental hereto or unless the context otherwise clearly
requires).
All accounting terms used herein and not expressly defined shall have
the meanings assigned to such terms in accordance with generally accepted
accounting principles, and the term "generally accepted accounting principles"
means such accounting principles as are generally accepted on the date of this
Indenture.
The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. The expressions "date of this
Indenture", "date hereof", "date as of which this Indenture is dated" and
"date of execution and delivery of this Indenture" and other expressions of
similar import refer to the effective date of the original execution and
delivery of this Indenture, viz. as of ____ __, 2001.
The terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" shall have the meaning set forth in Section
6.14.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 United
States Codess.ss.101 et seq., or any successor statute thereto.
"Board of Directors" means when used with reference to the Issuer,
the board of directors or any duly authorized committee of that board or any
director or directors and/or officer or officers to whom that board or
committee shall have duly delegated its authority.
"Board Resolution" means (1) one or more resolutions, certified by
the secretary or an assistant secretary of the Issuer to have been duly
adopted or consented to by the Board of Directors of the Issuer and to be in
full force and effect, or (2) a certificate signed by the director or
directors and/or officer or officers to whom the Board of Directors or any
duly authorized committee of that Board shall have duly delegated its
authority, in each case delivered to the Trustee for the Securities of any
series.
"Business Day" means, with respect to any Security, unless otherwise
specified in a Board Resolution and an Officers' Certificate with respect to a
particular series of Securities, a day that (a) in the Place of Payment (or in
any of the Places of Payment, if more than one) in which amounts are payable,
as specified in the form of such Security, and (b) in the city in which the
Corporate Trust Office is located, is not a day on which banking institutions
are authorized or required by law or regulation to close.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
as amended, or, if at any time after the execution and delivery of this
Indenture such Commission is not existing and
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performing the duties now assigned to it under the Trust Indenture Act of
1939, then the body performing such duties on such date.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets included on the most recent consolidated balance sheet of the Issuer
and its Restricted Subsidiaries, less applicable reserves and other properly
deductible items and after deducting therefrom (a) all current liabilities and
(b) all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles, all in accordance with generally
accepted accounting principles consistently applied.
"Corporate Trust Office" means the office of the Trustee of a series
of Securities at which the trust created by this Indenture shall, at any
particular time, be principally administered, which office is, at the date as
of which this Indenture is dated, located at 21 South Street, Morristown, New
Jersey 07960.
"Covenant Defeasance" has the meaning set forth in Section 10.3.
"Depositary" means, with respect to the Securities of any series
issuable or issued in the form of one or more Global Securities, the Person
designated as Depositary by the Issuer pursuant to Section 2.3 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or
include each Person who is then a Depositary hereunder, and, if at any time
there is more than one such Person, "Depositary" as used with respect to the
Securities of any such series shall mean the Depositary with respect to the
Global Securities of such series.
"Dollars" and the sign "$" means the coin and currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
"Eligible Guarantors" means each of the entities listed on Exhibit B
hereto.
"Event of Default" means any event or condition specified as such in
Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Global Security" means a Security evidencing all or a part of a
series of Securities issued to the Depositary for such series in accordance
with Section 2.3 and bearing the legend prescribed in Section 2.4.
"Guarantee" has the meaning specified in Section 13.2.
"Guarantor" has the meaning specified in Section 2.3.
"Holder", "Holder of Securities", "Securityholder" or other similar
terms mean, in the case of any Security, the Person in whose name such
Security is registered in the security register kept by the Issuer for that
purpose in accordance with the terms hereof.
"Hovnanian" means Hovnanian Enterprises, Inc., a Delaware corporation.
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"Indebtedness" with respect to any Person means, without duplication:
(a) (i) the principal of and premium, if any, and interest, if any,
on indebtedness for money borrowed of such Person, indebtedness of such
Person evidenced by bonds, notes, debentures or similar obligations, and
any guaranty by such Person of any indebtedness for money borrowed or
indebtedness evidenced by bonds, notes, debentures or similar obligations
of any other Person, whether any such indebtedness or guaranty is
outstanding on the date of this Indenture or is thereafter created,
assumed or incurred, (ii) obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's acceptance
or similar credit transaction; (iii) the principal of and premium, if
any, and interest, if any, on indebtedness incurred, assumed or
guaranteed by such Person in connection with the acquisition by it or any
of its subsidiaries of any other businesses, properties or other assets;
(iv) lease obligations which such Person capitalizes in accordance with
Statement of Financial Accounting Standards No. 13 promulgated by the
Financial Accounting Standards Board or such other generally accepted
accounting principles as may be from time to time in effect; (v) any
indebtedness of such Person representing the balance deferred and unpaid
of the purchase price of any property or interest therein (except any
such balance that constitutes an accrued expense or trade payable) and
any guaranty, endorsement or other contingent obligation of such Person
in respect of any indebtedness of another that is outstanding on the date
of this Indenture or is thereafter created, assumed or incurred by such
Person; and (vi) obligations of such Person under interest rate,
commodity or currency swaps, caps, collars, options and similar
arrangements; and
(b) any amendments, modifications, refundings, renewals or
extensions of any indebtedness or obligation described as Indebtedness in
clause (a) above.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, including, for all purposes of this instrument and any
such supplement, the provisions of the Trust Indenture Act of 1939 that are
deemed to be a part of and govern this instrument and any such supplement,
respectively, and shall include the forms and terms of particular series of
Securities established as contemplated hereunder.
"interest" means, when used with respect to non-interest bearing
Securities (including, without limitation, any Original Issue Discount
Security that by its terms bears interest only after maturity or upon default
in any other payment due on such Security), interest payable after maturity
(whether at stated maturity, upon acceleration or redemption or otherwise) or
after the date, if any, on which the Issuer becomes obligated to acquire a
Security, whether upon conversion, by purchase or otherwise.
"Issuer" means Hovnanian Enterprises, Inc., a Delaware corporation,
and, subject to Article Nine, its successors and assigns.
"Issuer Order" means a written statement, request or order of the
Issuer, which is signed in its name by the chairman of the Board of Directors,
the president or any vice president of the Issuer, and delivered to the
Trustee.
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"Legal Defeasance" has the meaning specified in Section 10.2.
"Officers' Certificate" means a certificate signed by the chairman of
the Board of Directors, the president, or any vice president and by the
treasurer, any assistant treasurer, the controller, any assistant controller,
the secretary or any assistant secretary of the Issuer. Each such certificate
shall include the statements provided for in Section 11.5 if and to the extent
required by the provisions of such Section 11.5. One of the officers signing
an Officers' Certificate given pursuant to Section 4.3 shall be the principal
executive, financial or accounting officer of the Issuer.
"Opinion of Counsel" means an opinion in writing signed by the chief
counsel of the Issuer or by such other legal counsel who may be an employee of
or counsel to the Issuer and who shall be reasonably satisfactory to the
Trustee. Each such opinion shall include the statements provided for in
Section 11.5, if and to the extent required by the provisions of such Section
11.5.
"original issue date" of any Security (or portion thereof) means the
earlier of (a) the date of such Security or (b) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly)
on registration of transfer, exchange or substitution.
"original issue discount" of any debt security, including any
Original Issue Discount Security, means the difference between the principal
amount of such debt security and the initial issue price of such debt security
(as set forth in the case of an Original Issue Discount Security on the face
of such Security).
"Original Issue Discount Security" means any Security that provides
for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the maturity thereof pursuant to Article
Five.
"Outstanding" when used with reference to Securities, shall, subject
to the provisions of Section 7.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities (other than Securities of any series as to which the
provisions of Article Ten hereof shall not be applicable), or portions
thereof, for the payment or redemption of which moneys or U.S. Government
Obligations (as provided for in Section 10.1) in the necessary amount
shall have been deposited in trust with the Trustee or with any paying
agent (other than the Issuer) or shall have been set aside, segregated
and held in trust by the Issuer for the Holders of such Securities (if
the Issuer shall act as its own paying agent), provided that, if such
Securities, or portions thereof, are to be redeemed prior to the maturity
thereof, notice of such redemption shall have been given as herein
provided, or provision satisfactory to the Trustee shall have been made
for giving such notice; and
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(c) Securities which shall have been paid or in substitution for
which other Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.9 (except with respect to any such
Security as to which proof satisfactory to the Trustee is presented that
such Security is held by a Person in whose hands such Security is a
legal, valid and binding obligation of the Issuer).
In determining whether the Holders of the requisite aggregate
principal amount of Outstanding Securities of any or all series have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding for such purposes shall be the portion of
the principal amount thereof that would be due and payable as of the date of
such determination (as certified by the Issuer to the Trustee) upon a
declaration of acceleration of the maturity thereof pursuant to Article Five.
"Periodic Offering" means an offering of Securities of a series from
time to time, the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the stated
maturity or maturities thereof and the redemption provisions, if any, with
respect thereto, are to be determined by the Issuer or its agents upon the
issuance of such Securities.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and interest, if any,
on the Securities of such series are payable as determined in accordance with
Section 2.3.
"principal" of a debt security, including any Security, means the
amount (including, without limitation, if and to the extent applicable, any
premium and, in the case of an Original Issue Discount Security, any accrued
original issue discount, but excluding interest) that is payable with respect
to such debt security as of any date and for any purpose (including, without
limitation, in connection with any sinking fund, if any, upon any redemption
at the option of the Issuer, upon any purchase or exchange at the option of
the Issuer or the holder of such debt security and upon any acceleration of
the maturity of such debt security).
"principal amount" of a debt security, including any Security, means
the principal amount as set forth on the face of such debt security.
"record date" shall have the meaning set forth in Section 2.7.
"Responsible Officer", when used with respect to the Trustee of a
series of Securities, means any officer of the Trustee with direct
responsibility for the administration of the trust created by this Indenture.
"Restricted Subsidiary" means (a) any Subsidiary of the Issuer other
than an Unrestricted Subsidiary, and (b) any Subsidiary of the Issuer which
was an Unrestricted Subsidiary but which, subsequent to the date hereof, is
designated by the Issuer (by Board Resolution) to be a
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Restricted Subsidiary; provided, however, that the Issuer may not designate
any such Subsidiary to be a Restricted Subsidiary if the Issuer would thereby
breach any covenant or agreement herein contained (on the assumptions that any
outstanding Indebtedness of such Subsidiary was incurred at the time of such
designation).
"Securities Act" shall have the meaning set forth in Section 1.1.
"Security" or "Securities" has the meaning stated in the first
recital of this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture; provided, however that if at
any time there is more than one Person acting as Trustee under this
Instrument, "Securities" with respect to the Indenture as to which such Person
is Trustee shall have the meaning stated in the first recital of this
instrument and shall more particularly mean Securities authenticated and
delivered under this instrument, exclusive, however, of Securities of any
series as to which such Person is not Trustee.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Issuer within the meaning of Rule 1.02(w) of Regulation S-K
promulgated by the Commission as in effect on the date of this Indenture.
"Subsidiary" of any specified Person means any corporation of which
such Person, or such Person and one or more Subsidiaries of such Person, or
any one or more Subsidiaries of such Person, directly or indirectly own voting
securities entitling any one or more of such Persons and its Subsidiaries to
elect a majority of the directors, either at all times or, so long as there is
no default or contingency which permits the holders of any other class or
classes of securities to vote for the election of one or more directors.
"Trust Indenture Act of 1939" (except as otherwise provided in
Sections 8.1 and 8.2) means the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990, as in force at the date as of which this
Indenture is originally executed.
"Trustee" means the Person identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Six, shall also
include any successor trustee. "Trustee" shall also mean or include each
Person who is then a trustee hereunder and, if at any time there is more than
one such Person, "Trustee" as used with respect to the Securities of any
series shall mean the trustee with respect to the Securities of such series.
"Unrestricted Subsidiary" means (a) any Subsidiary of the Issuer
acquired or organized after the date hereof, provided, however, that such
Subsidiary shall not be a successor, directly or indirectly, to any Restricted
Subsidiary, and (b) any Subsidiary of the Issuer substantially all the assets
of which consist of stock or other securities of a Subsidiary or Subsidiaries
of the character described in clause (a) of this paragraph, unless and until
such Subsidiary shall have been designated to be a Restricted Subsidiary
pursuant to clause (b) of the definition of "Restricted Subsidiary".
"U.S. Government Obligations" means non-callable, non-payable bonds,
notes, bills or other similar obligations issued or guaranteed by the United
States government or any agency thereof the full and timely payment of which
are backed by the full faith and credit of the United States.
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"vice president," when used with respect to the Issuer or the
Trustee, means any vice president, regardless of whether designated by a
number or a word or words added before or after the title "vice president."
"Yield to Maturity" means the yield to maturity on a series of
Securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with generally accepted financial practice or as
otherwise provided in the terms of such series of Securities.
ARTICLE TWO
SECURITIES
SECTION 2.1. Forms Generally. The Securities of each series shall be
substantially in such form (not inconsistent with this Indenture) as shall be
established by or pursuant to one or more Board Resolutions (as set forth in a
Board Resolution or, to the extent established pursuant to rather than set
forth in a Board Resolution, an Officers' Certificate detailing such
establishment) or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have
imprinted or otherwise reproduced thereon such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may
be required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities as evidenced by their
execution of such Securities.
SECTION 2.2. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be
substantially as follows:
This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
______________________, as Trustee
By_____________________________
Authorized Signatory
If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Securities of such series shall
bear, in addition to the Trustee's certificate of authentication, an alternate
Certificate of Authentication which shall be substantially as follows:
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This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
__________________________, as Trustee
By________________________
as Authenticating Agent
By________________________
Authorized Signatory
SECTION 2.3. Amount Unlimited, Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series and the Securities
of each such series shall rank equally and pari passu with the Securities of
each other series and with all other unsecured and unsubordinated debt of the
Issuer. There shall be established in or pursuant to one or more Board
Resolutions (and, to the extent established pursuant to rather than set forth
in a Board Resolution, in an Officers' Certificate detailing such
establishment) or established in one or more indentures supplemental hereto,
prior to the initial issuance of Securities of any series:
(1) the designation of the Securities of the series, which
shall distinguish the Securities of such series from the Securities
of all other series;
(2) any limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or
in lieu of, other Securities of the series pursuant to Section 2.8,
2.9, 2.11, 8.5 or 12.3);
(3) the date or dates on which the principal of the Securities
of the series is payable;
(4) the rate or rates at which the Securities of the series
shall bear interest, if any, the date or dates from which any such
interest shall accrue, on which any such interest shall be payable
and on which a record shall be taken for the determination of
Holders to whom any such interest is payable or the method by which
such rate or rates or date or dates shall be determined or both;
(5) the place or places where and the manner in which the
principal of, premium, if any, and interest, if any, on Securities
of the series shall be payable (if other than as provided in Section
3.2) and the office or agency for the Securities of the series
maintained by the Issuer pursuant to Section 3.2;
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(6) the right, if any, of the Issuer to redeem, purchase or
repay Securities of the series, in whole or in part, at its option
and the period or periods within which, the price or prices (or the
method by which such price or prices shall be determined or both) at
which, the form or method of payment therefor if other than in cash
and any terms and conditions upon which and the manner in which (if
different from the provisions of Article Twelve) Securities of the
series may be so redeemed, purchased or repaid, in whole or in part,
pursuant to any sinking fund or otherwise;
(7) the obligation, if any, of the Issuer to redeem, purchase
or repay Securities of the series in whole or in part pursuant to
any mandatory redemption, sinking fund or analogous provisions or at
the option of a Holder thereof and the period or periods within
which the price or prices (or the method by which such price or
prices shall be determined or both) at which, the form or method of
payment therefor if other than in cash and any terms and conditions
upon which and the manner in which (if different from the provisions
of Article Twelve) Securities of the series shall be redeemed,
purchased or repaid, in whole or in part, pursuant to such
obligation;
(8) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Securities of the
series shall be issuable;
(9) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be
payable upon acceleration of the maturity thereof;
(10) whether Securities of the series will be issuable as
Global Securities;
(11) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions,
the form and terms of such certificates, documents or conditions;
(12) any trustees, depositaries, authenticating or paying
agents, transfer agents or registrars or any other agents with
respect to the Securities of such series;
(13) any deleted, modified or additional events of default or
remedies or any deleted, modified or additional covenants with
respect to the Securities of such series;
(14) whether the provisions of Article Ten will not be
applicable to Securities of such series;
(15) any provision relating to the issuance of Securities of
such series at an original issue discount (including, without
limitation, the issue price thereof, the rate or rates at which such
original issue discount shall accrete, if any, and the date or dates
from or to which or period or periods during which such original
issue discount shall accrete at such rate or rates);
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(16) if other than Dollars, the foreign currency in which
payment of the principal of, premium, if any, and interest, if any,
on the Securities of such series shall be payable;
(17) if other than First Union National Bank is to act as
Trustee for the Securities of such series, the name and Corporate
Trust Office of such Trustee;
(18) if the amounts of payments of principal of, premium, if
any, and interest, if any, on the Securities of such series are to
be determined with reference to an index, the manner in which such
amounts shall be determined;
(19) the terms for conversion or exchange, if any, with respect
to the Securities of such series;
(20) which, if any, of the Eligible Guarantors shall guarantee
the Securities on the terms set forth in Article Thirteen (each of
the Eligible Guarantors that guarantee the Securities set forth in
Article Thirteen, if any, a "Guarantor"); and
(21) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical,
except as to denomination and except as may otherwise be provided by or
pursuant to the Board Resolution or Officers' Certificate referred to above or
as set forth in any such indenture supplemental hereto. All Securities of any
one series need not be issued at the same time and may be issued from time to
time, consistent with the terms of this Indenture, if so provided by or
pursuant to such Board Resolution, such Officers' Certificate or in any such
indenture supplemental hereto.
Any such Board Resolution or Officers' Certificate referred to above
with respect to Securities of any series filed with the Trustee on or before
the initial issuance of the Securities of such series shall be incorporated
herein by reference with respect to Securities of such series and shall
thereafter be deemed to be a part of the Indenture for all purposes relating
to Securities of such series as fully as if such Board Resolution or Officers'
Certificate were set forth herein in full.
SECTION 2.4. Authentication and Delivery of Securities. The Issuer
may deliver Securities of any series executed by the Issuer to the Trustee for
authentication together with the applicable documents referred to below in
this Section 2.4, and the Trustee shall thereupon authenticate and deliver
such Securities to, or upon the order of, the Issuer (contained in the Issuer
Order referred to below in this Section 2.4) or pursuant to such procedures
acceptable to the Trustee and to such recipients as may be specified from time
to time by an Issuer Order. The maturity date, original issue date, interest
rate, if any, and any other terms of the Securities of such series shall be
determined by or pursuant to such Issuer Order and procedures. If provided for
in such procedures and agreed to by the Trustee, such Issuer Order may
authorize authentication and delivery pursuant to oral instructions from the
Issuer or its duly authorized agent, which instructions shall be promptly
confirmed in writing. In authenticating the Securities of such series and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive (in the case of
subparagraphs (2), (3) and (4)
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below only at or before the time of the first request of the Issuer to the
Trustee to authenticate Securities of such series) and (subject to Section
6.1) shall be fully protected in relying upon, unless and until such documents
have been superseded or revoked:
(1) an Issuer Order requesting such authentication and setting
forth delivery instructions provided that, with respect to
Securities of a series subject to a Periodic Offering, (a) such
Issuer Order may be delivered by the Issuer to the Trustee prior to
the delivery to the Trustee of such Securities for authentication
and delivery, (b) the Trustee shall authenticate and deliver
Securities of such series for original issue from time to time, in
an aggregate principal amount not exceeding the aggregate principal
amount established for such series, pursuant to an Issuer Order or
pursuant to procedures acceptable to the Trustee as may be specified
from time to time by an Issuer Order, (c) the maturity date or
dates, original issue date or dates, interest rate or rates, if any,
and any other terms of Securities of such series shall be determined
by an Issuer Order or pursuant to such procedures, (d) if provided
for in such procedures, such Issuer Order may authorize
authentication and delivery pursuant to oral or electronic
instructions from the Issuer or its duly authorized agent or agents,
which oral instructions shall be promptly confirmed in writing and
(e) after the original issuance of the first Security of such series
to be issued, any separate request by the Issuer that the Trustee
authenticate Securities of such series for original issuance will be
deemed to be a certification by the Issuer that it is in compliance
with all conditions precedent provided for in this Indenture
relating to the authentication and delivery of such Securities;
(2) the Board Resolution, Officers' Certificate or executed
supplemental indenture referred to in Sections 2.1 and 2.3 by or
pursuant to which the forms and terms of the Securities of such
series were established;
(3) an Officers' Certificate setting forth the form or forms
and terms of the Securities stating that the form or forms and terms
of the Securities have been established pursuant to Sections 2.1 and
2.3 and comply with this Indenture and covering such other matters
as the Trustee may reasonably request; and
(4) at the option of the Issuer, either an Opinion of Counsel,
or a letter from legal counsel addressed to the Trustee permitting
it to rely on an Opinion of Counsel, substantially to the effect
that:
(a) the form or forms of the Securities of such series
have been duly authorized and established in conformity with
the provisions of this Indenture;
(b) in the case of an underwritten offering, the terms of
the Securities of such series have been duly authorized and
established in conformity with the provisions of this
Indenture, and, in the case of an offering that is not
underwritten, certain terms of the Securities of such series
have been established pursuant to a Board Resolution, an
Officers' Certificate or a supplemental indenture in accordance
with this Indenture, and when such other terms as are to be
established pursuant to procedures set forth in an Issuer Order
shall have been
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established, all such terms will have been duly authorized by
the Issuer and will have been established in conformity with
the provisions of this Indenture;
(c) when the Securities of such series have been executed
by the Issuer and authenticated by the Trustee in accordance
with the provisions of this Indenture and delivered to and duly
paid for by the purchasers thereof, they will have been duly
issued under this Indenture and will be valid and legally
binding obligations of the Issuer, enforceable in accordance
with their respective terms, and will be entitled to the
benefits of this Indenture; and
(d) the execution and delivery by the Issuer of, and the
performance by the Issuer of its obligations under, the
Securities of such series will not contravene any provision of
applicable law or the articles of incorporation or bylaws of
the Issuer or any agreement or other instrument binding upon
the Issuer or any of its Subsidiaries that is material to the
Issuer and its Subsidiaries, considered as one enterprise, or,
to such counsel's knowledge after the inquiry indicated
therein, any judgment, order or decree of any governmental
agency or any court having jurisdiction over the Issuer or any
Subsidiary of the Issuer, and no consent, approval or
authorization of any governmental body or agency is required
for the performance by the Issuer of its obligations under the
Securities, except such as are specified and have been obtained
and such as may be required by the securities or blue sky laws
of the various states in connection with the offer and sale of
the Securities.
In addition, if the authentication and delivery relates to a new
series of Securities created by an indenture supplemental hereto, such Opinion
of Counsel shall also state that all laws and requirements with respect to the
form and execution by the Issuer of the supplemental indenture with respect to
the series of Securities have been complied with, the Issuer has corporate
power to execute and deliver any such supplemental indenture and has taken all
necessary corporate action for those purposes and any such supplemental
indenture has been executed and delivered and constitutes the legal, valid and
binding obligation of the Issuer enforceable in accordance with its terms.
In rendering such opinions, such counsel may qualify any opinions as
to enforceability by stating that such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium and other
similar laws affecting the rights and remedies of creditors and is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the State of New
Jersey and the federal law of the United States, upon opinions of other
counsel (copies of which shall be delivered to the Trustee), who shall be
counsel reasonably satisfactory to the Trustee, in which case the opinion
shall state that such counsel believes that both such counsel and the Trustee
are entitled so to rely. Such counsel may also state that, insofar as such
opinion involves factual matters, such counsel has relied, to the extent such
counsel deems proper, upon certificates of officers of the Issuer and its
Subsidiaries and certificates of public officials.
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The Trustee shall have the right to decline to authenticate and
deliver any Securities of any series under this Section 2.4 if the Trustee,
being advised by counsel, determines that such action may not lawfully be
taken by the Issuer or if the Trustee in good faith by its board of directors
or board of trustees, executive committee or a trust committee of directors or
trustees or Responsible Officers shall determine that such action would expose
the Trustee to personal liability to existing Holders or would adversely
affect the Trustee's own rights, duties or immunities under the Securities,
this Indenture or otherwise.
If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Global
Securities, then the Issuer shall execute and the Trustee shall, in accordance
with this Section 2.4 and the Issuer Order with respect to such series,
authenticate and deliver one or more Global Securities that (i) shall
represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series to be issued in the
form of Global Securities and not yet cancelled, (ii) shall be registered in
the name of the Depositary for such Global Security or Securities or the
nominee of such Depositary, (iii) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions, and (iv) shall bear
a legend substantially to the following effect: "Unless and until it is
exchanged in whole or in part for Securities in definitive registered form,
this Security may not be transferred except as a whole by the Depositary to
the 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."
Each Depositary designated pursuant to Section 2.3 must, at the time
of its designation and at all times while it serves as Depositary, be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and any other applicable statute or regulation.
Reference is made to Section 13.4 concerning execution and delivery
of the Guarantees.
SECTION 2.5. Execution of Securities. The Securities shall be signed
on behalf of the Issuer by the chairman of the Board of Directors, the
president, any vice president or the treasurer of the Issuer, under its
corporate seal which may, but need not, be attested by its secretary or one of
its assistant secretaries. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. The seal of the Issuer
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of a seal or any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall
be authenticated and delivered by the Trustee or disposed of by the Issuer,
such Security nevertheless may be authenticated and delivered or disposed of
as though the person who signed such Security had not ceased to be such
officer of the Issuer; and any Security may be signed on behalf of the Issuer
by such persons as, at the actual date of the execution of such Security,
shall be the proper officers of the Issuer, although at the date of the
execution and delivery of this Indenture any such person was not such an
officer.
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Reference is made to Section 13.4 concerning execution and delivery
of the Guarantees.
SECTION 2.6. Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by the manual signature of one
of its authorized signatories, or its Authenticating Agent, shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
The execution of such certificate by the Trustee or its Authenticating Agent
upon any Security executed by the Issuer shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture. Each
reference in this Indenture to authentication by the Trustee includes
authentication by an agent appointed pursuant to Section 6.14.
Reference is made to Section 13.4 concerning execution and delivery
of the Guarantees.
SECTION 2.7. Denomination and Date of Securities; Payments of
Interest. The Securities of each series shall be issuable in registered form
in denominations established as contemplated by Section 2.3 or, with respect
to the Securities of any series, if not so established, in denominations of
$1,000 and any integral multiple thereof. The Securities of each series shall
be numbered, lettered or otherwise distinguished in such manner or in
accordance with such plan as the officers of the Issuer executing the same may
determine with the approval of the Trustee, as evidenced by the execution and
authentication thereof.
Each Security shall be dated the date of its authentication. The
Securities of each series shall bear interest, if any, from the date, and such
interest, if any, shall be payable on the dates, established as contemplated
by Section 2.3.
The Person in whose name any Security of any series is registered at
the close of business on any record date applicable to a particular series
with respect to any interest payment date for such series shall be entitled to
receive the interest, if any, payable on such interest payment date
notwithstanding any transfer or exchange of such Security subsequent to the
record date and prior to such interest payment date, except if and to the
extent the Issuer shall default in the payment of the interest due on such
interest payment date for such series, in which case such defaulted interest
shall be paid to the Persons in whose names Outstanding Securities for such
series are registered (a) at the close of business on a subsequent record date
(which shall be not less than five Business Days prior to the date of payment
of such defaulted interest) established by notice given by mail by or on
behalf of the Issuer to the Holders of Securities not less than 15 days
preceding such subsequent record date or (b) as determined by such other
procedure as is mutually acceptable to the Issuer and the Trustee. The term
"record date" as used with respect to any interest payment date (except a date
for payment of defaulted interest) for the Securities of any series shall mean
the date specified as such in the terms of the Securities of such series
established as contemplated by Section 2.3, or, if no such date is so
established, if such interest payment date is the first day of a calendar
month, the fifteenth day of the next preceding calendar month or, if such
interest payment date is the fifteenth day of a calendar month, the first day
of such calendar month, whether or not such record date is a Business Day.
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SECTION 2.8. Registration, Transfer and Exchange. The Issuer will
keep at each office or agency to be maintained for the purpose as provided in
Section 3.2 for each series of Securities a register or registers in which,
subject to such reasonable regulations as it may prescribe, it will provide
for the registration of Securities of each series and the registration of
transfer of Securities of such series. Each such register shall be in written
form in the English language or in any other form capable of being converted
into such form within a reasonable time. At all reasonable times such register
or registers shall be open for inspection and available for copying by the
Trustee.
Upon due presentation for registration of transfer of any Security of
any series at any such office or agency to be maintained for the purpose as
provided in Section 3.2, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities of the same series, maturity date, interest rate, if
any, and original issue date in authorized denominations for a like aggregate
principal amount.
All Securities presented for registration of transfer shall (if so
required by the Issuer or the Trustee) be duly endorsed by, or be accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Issuer and the Trustee duly executed by, the Holder or his attorney duly
authorized in writing.
At the option of the Holder thereof, Securities of any series (other
than a Global Security, except as set forth below) may be exchanged for a
Security or Securities of such series having authorized denominations and an
equal aggregate principal amount, upon surrender of such Securities to be
exchanged at the agency of the Issuer that shall be maintained for such
purpose in accordance with Section 3.2.
The Issuer may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
registration of transfer of Securities. No service charge shall be made for
any such transaction or for any exchange of Securities of any series as
contemplated by the immediately preceding paragraph.
The Issuer shall not be required to exchange or register a transfer
of (a) any Securities of any series for a period of 15 days next preceding the
first mailing or publication of notice of redemption of Securities of such
series to be redeemed, (b) any Securities selected, called or being called for
redemption, in whole or in part, except, in the case of any Security to be
redeemed in part, the portion thereof not so to be redeemed or (c) any
Security if the Holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Security in whole or in part, except the portion of
such Security not required to be repurchased.
Notwithstanding any other provision of this Section 2.8, unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, a Global Security representing all or a part of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series
or a nominee of such successor Depositary.
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If at any time the Depositary for any Securities of a series
represented by one or more Global Securities notifies the Issuer that it is
unwilling or unable to continue as Depositary for such Securities or if at any
time the Depositary for such Securities shall no longer be eligible under
Section 2.4, the Issuer shall appoint a successor Depositary with respect to
such Securities. If a successor Depositary for such Securities is not
appointed by the Issuer within 90 days after the Issuer receives such notice
or becomes aware of such ineligibility, the Issuer's election pursuant to
Section 2.3 that such Securities be represented by one or more Global
Securities shall no longer be effective and the Issuer shall execute, and the
Trustee, upon receipt of an Issuer Order for the authentication and delivery
of definitive Securities of such series, will authenticate and deliver
Securities of such series in definitive registered form, in any authorized
denominations, in an aggregate principal amount equal to the principal amount
of the Global Security or Securities representing such Securities in exchange
for such Global Security or Securities.
The Issuer may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global
Securities shall no longer be represented by a Global Security or Securities.
In such event, the Issuer shall execute, and the Trustee, upon receipt of an
Issuer Order for the authentication and delivery of definitive Securities of
such series, shall authenticate and deliver, Securities of such series in
definitive registered form, in any authorized denominations, in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities representing such Securities, in exchange for such Global Security
or Securities.
If specified by the Issuer pursuant to Section 2.3 with respect to
Securities represented by a Global Security, the Depositary for such Global
Security may surrender such Global Security in exchange in whole or in part
for Securities of the same series in definitive registered form on such terms
as are acceptable to the Issuer and such Depositary. Thereupon, the Issuer
shall execute, and the Trustee shall authenticate and deliver, without service
charge,
(i) to the Person specified by such Depositary, a new Security
or Securities of the same series, of any authorized denominations as
requested by such Person, in an aggregate principal amount equal to
and in exchange for such Person's beneficial interest in the Global
Security; and
(ii) to such Depositary a new Global Security in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of
Securities authenticated and delivered pursuant to clause (i) above.
Upon the exchange of a Global Security for Securities in definitive
registered form in authorized denominations, such Global Security shall be
cancelled by the Trustee or an agent of the Trustee. Securities in definitive
registered form issued in exchange for a Global Security pursuant to this
Section 2.8 shall be registered in such names and in such authorized
denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Trustee or the Issuer or an agent of
the Issuer. The Trustee or such agent shall deliver at its office such
Securities to or as directed by the Persons in whose names such Securities are
so registered.
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All Securities issued upon any registration of transfer or exchange
of Securities shall be valid and legally binding obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall become
mutilated or defaced or be destroyed, lost or stolen, the Issuer in its
discretion may execute, and upon the written request of the Issuer, the
Trustee shall authenticate and deliver a new Security of the same series,
maturity date, interest rate, if any, and original issue date, bearing a
number or other distinguishing symbol not contemporaneously outstanding, in
exchange and substitution for the mutilated or defaced Security, or in lieu of
and in substitution for the Security so destroyed, lost or stolen. In every
case the applicant for a substitute Security shall furnish to the Issuer and
to the Trustee and any agent of the Issuer or the Trustee such security or
indemnity as may be required by the Trustee or the Issuer or any such agent to
indemnify and defend and to save each of the Trustee and the Issuer and any
such agent harmless and, in every case of destruction, loss or theft, evidence
to their satisfaction of the destruction, loss or theft of such Security and
of the ownership thereof and in the case of mutilation or defacement, shall
surrender the Security to the Trustee or such agent.
Upon the issuance of any substitute Security, the Issuer may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee or its agent) connected therewith. In case
any Security which has matured or is about to mature or has been called for
redemption in full shall become mutilated or defaced or be destroyed, lost or
stolen, the Issuer may instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the
case of a mutilated or defaced Security), if the applicant for such payment
shall furnish to the Issuer and to the Trustee and any agent of the Issuer or
the Trustee such security or indemnity as any of them may require to hold each
of them harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Issuer and the Trustee and any agent of
the Issuer or the Trustee evidence to the Trustee's satisfaction of the
destruction, loss or theft of such Security and of the ownership thereof.
Every substitute Security of any series issued pursuant to the
provisions of this Section by virtue of the fact that any such Security is
destroyed, lost or stolen shall constitute an additional contractual
obligation of the Issuer, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone and shall be entitled to
all the benefits of (but shall be subject to all the limitations of rights set
forth in) this Indenture equally and proportionately with any and all other
Securities of such series duly authenticated and delivered hereunder. All
Securities shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, defaced, destroyed, lost or stolen
Securities and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments
or other securities without their surrender.
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SECTION 2.10. Cancellation of Securities; Disposition Thereof. All
Securities surrendered for payment, redemption, registration of transfer or
exchange, or for credit against any payment in respect of a sinking or
analogous fund, if surrendered to the Issuer or any agent of the Issuer or the
Trustee or any agent of the Trustee, shall be delivered to the Trustee or its
agent for cancellation or, if surrendered to the Trustee, shall be cancelled
by it; and no Securities shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture. The Trustee shall
dispose of all cancelled Securities in accordance with its standard procedures
and shall deliver a certificate of such disposition to the Company. If the
Issuer or its agent shall acquire any of the Securities, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are delivered to the
Trustee or its agent for cancellation.
SECTION 2.11. Temporary Securities. Pending the preparation of
definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be
issuable in any authorized denomination, and substantially in the form of the
definitive Securities of such series but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Issuer with the concurrence of the Trustee as evidenced by
the execution and authentication thereof. Temporary Securities may contain
such references to any provisions of this Indenture as may be appropriate.
Every temporary Security shall be executed by the Issuer and be authenticated
by the Trustee upon the same conditions and in substantially the same manner,
and with like effect, as the definitive Securities. Without unreasonable delay
the Issuer shall execute and shall furnish definitive Securities of such
series and thereupon temporary Securities of such series may be surrendered in
exchange therefor without charge at each office or agency to be maintained by
the Issuer for that purpose pursuant to Section 3.2 and the Trustee shall
authenticate and deliver in exchange for such temporary Securities of such
series an equal aggregate principal amount of definitive Securities of the
same series having authorized denominations. Until so exchanged, the temporary
Securities of any series shall be entitled to the same benefits under this
Indenture as definitive Securities of such series, unless otherwise
established pursuant to Section 2.3.
SECTION 2.12. CUSIP Numbers. The Issuer in issuing the Securities
may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Securities
or as contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Securities, and any
such redemption shall not be affected by any defect in or omission of such
numbers.
ARTICLE THREE
COVENANTS
SECTION 3.1. Payment of Principal and Interest. The Issuer covenants
and agrees that it will duly and punctually pay or cause to be paid the
principal of, premium, if any, and interest,
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if any, on each of the Securities at the place, at the respective times and in
the manner provided in the Securities.
SECTION 3.2. Offices for Notices and Payments, etc. So long as any
of the Securities are Outstanding, the Issuer will maintain in each Place of
Payment, an office or agency where the Securities may be presented for
payment, an office or agency where the Securities may be presented for
registration of transfer and for exchange as provided in this Indenture, and
an office or agency where notices and demands to or upon the Issuer in respect
of the Securities or of this Indenture may be served. In case the Issuer shall
at any time fail to maintain any such office or agency, or shall fail to give
notice to the Trustee of any change in the location thereof, presentation may
be made and notice and demand may be served in respect of the Securities or of
this Indenture at the Corporate Trust Office. The Issuer hereby initially
designates the Corporate Trust Office for each such purpose and appoints the
Trustee as registrar and paying agent and as the agent upon whom notices and
demands may be served with respect to the Securities.
SECTION 3.3. No Interest Extension. In order to prevent any
accumulation of claims for interest after maturity thereof, the Issuer will
not directly or indirectly extend or consent to the extension of the time for
the payment of any claim for interest on any of the Securities and will not
directly or indirectly be a party to or approve any such arrangement by the
purchase or funding of said claims or in any other manner; provided, however,
that this Section 3.3 shall not apply in any case where an extension shall be
made pursuant to a plan proposed by the Issuer to the Holders of all
Securities of any series then Outstanding.
SECTION 3.4. Appointments to Fill Vacancies in Trustee's Office. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of the
Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 3.5. Provision as to Paying Agent. (a) If the Issuer shall
appoint a paying agent other than the Trustee, it will cause such paying agent
to execute and deliver to the Trustee an instrument in which such paying agent
shall agree with the Trustee, subject to the provisions of this Section 3.5,
(1) that it will hold all sums held by it as such paying agent
for the payment of the principal of or interest, if any, on the
Securities (whether such sums have been paid to it by the Issuer or
by any other obligor on the Securities) in trust for the benefit of
the Holders of the Securities and the Trustee; and
(2) that it will give the Trustee notice of any failure by the
Issuer (or by any other obligor on the Securities) to make any
payment of the principal of, premium, if any, or interest, if any,
on the Securities when the same shall be due and payable; and
(3) that it will, at any time during the continuance of any
such failure, upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such paying agent.
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(b) If the Issuer shall act as its own paying agent, it will, on or
before each due date of the principal of or interest, if any, on the
Securities, set aside, segregate and hold in trust for the benefit of the
Holders of the Securities a sum sufficient to pay such principal, premium, if
any, or interest, if any, so becoming due and will notify the Trustee of any
failure to take such action and of any failure by the Issuer (or by any other
obligor under the Securities) to make any payment of the principal of,
premium, if any, or interest, if any, on the Securities when the same shall
become due and payable.
(c) Anything in this Section 3.5 to the contrary notwithstanding,
the Issuer may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid
to the Trustee all sums held in trust by it, or any paying agent hereunder, as
required by this Section 3.5, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 3.5 to the contrary notwithstanding,
any agreement of the Trustee or any paying agent to hold sums in trust as
provided in this Section 3.5 is subject to Sections 10.3 and 10.4.
(e) Whenever the Issuer shall have one or more paying agents, it
will, on or before each due date of the principal of or interest, if any, on
any Securities, deposit with a paying agent a sum sufficient to pay the
principal, premium, if any, or interest, if any, so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such principal,
premium, if any, or interest, if any, and (unless such paying agent is the
Trustee) the Issuer will promptly notify the Trustee of its action or failure
so to act.
SECTION 3.6. Limitation on Liens. So long as any of the Securities
are Outstanding, the Issuer will not, and will not permit any Restricted
Subsidiary to, pledge, mortgage, hypothecate or grant a security interest in,
or permit any mortgage, pledge, security interest or other lien upon, any
property or assets owned by the Issuer or any Restricted Subsidiary to secure
any Indebtedness, without making effective provision whereby the Securities
then Outstanding shall (so long as such other Indebtedness shall be so
secured) be equally and ratably secured with any and all such other
Indebtedness and any other indebtedness similarly entitled to be equally and
ratably secured; provided, however, that this restriction shall not apply to
nor prevent the creation or existence of:
(a) any mortgage, pledge, security interest, lien or encumbrance
upon any property or assets created at the time of the acquisition of
such property or assets by the Issuer or any Restricted Subsidiary or
within one year after such time to secure all or a portion of the
purchase price for such property or assets;
(b) any mortgage, pledge, security interest, lien or encumbrance
upon any property or assets existing thereon at the time of the
acquisition thereof by the Issuer or any Restricted Subsidiary (whether
or not the obligations secured thereby are assumed by the Issuer or any
Subsidiary of the Issuer);
(c) any mortgage, pledge, security interest, lien or encumbrance
upon any property or assets, whenever acquired, of any corporation or
other entity that becomes a
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Restricted Subsidiary after the date hereof, provided that (i) the
instrument creating such mortgage, pledge, security interest, lien or
encumbrance shall be in effect prior to the time such corporation or
other entity becomes a Restricted Subsidiary and (ii) such mortgage,
pledge, security interest, lien or encumbrance shall only apply to
properties or assets owned by such corporation or other entity at the
time it becomes a Restricted Subsidiary or thereafter acquired by it from
sources other than the Issuer or another Restricted Subsidiary;
(d) any mortgage, pledge, security interest, lien or encumbrance in
favor of the Issuer or any wholly-owned Subsidiary of the Issuer;
(e) any mortgage, pledge, security interest, lien or encumbrance
created or assumed by the Issuer or a Restricted Subsidiary in connection
with the issuance of debt securities to interest on which is excludable
from gross income of the holder of such security pursuant to the Internal
Revenue Code of 1986, as amended, for the purpose of financing, in whole
or in part, the acquisition or construction of property or assets to be
used by the Issuer or a Subsidiary;
(f) any extension, renewal or refunding of any mortgage, pledge,
security interest, lien or encumbrance permitted by the foregoing
subparagraphs (a) through (e) above on substantially the same property or
assets theretofore subject thereto;
(g) any mortgage, pledge, security interest, lien or encumbrance
securing any Indebtedness in an amount which, together with all other
Indebtedness secured by a mortgage, pledge, security interest, lien or
encumbrance that is not otherwise permitted by the provisions of this
Section 3.6, does not at the time of the incurrence of the Indebtedness
so secured exceed 20% of Consolidated Net Tangible Assets;
(h) deposits or pledges to secure the payment of workmen's
compensation, unemployment insurance or other social security benefits or
obligations, or to secure the performance of trade contracts, leases,
public or statutory obligations, surety or appeal bonds or other
obligations of a like general nature incurred in the ordinary course of
business;
(i) mechanics', materialmen's, warehousemen's, carriers' or other
like liens arising in the ordinary course of business securing
obligations which are not overdue for a period longer than 30 days or
which are being contested in good faith by appropriate proceedings;
(j) liens for taxes, assessments or other governmental charges not
yet payable or being contested in good faith and as to which adequate
reserves shall have been established in accordance with generally
accepted accounting principles;
(k) non-recourse mortgages on Income Producing Properties securing
Indebtedness;
(l) liens on assets of a Mortgage Subsidiary to secure only a
Warehouse Line of Credit provided to such Subsidiary;
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(m) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business; or
(n) liens in connection with capital leases or sale leaseback
transactions not securing any other indebtedness.
In case the Issuer or any Restricted Subsidiary shall propose to
pledge, mortgage, hypothecate or grant a security interest in any property or
assets owned by the Issuer or any Restricted Subsidiary to secure any
Indebtedness, other than as permitted by subdivisions (a) to (n), inclusive,
of this Section 3.6, the Issuer will prior thereto give written notice thereof
to the Trustee, and the Issuer will, or will cause such Restricted Subsidiary
to, prior to or simultaneously with such pledge, mortgage, hypothecation or
grant of security interest, by supplemental indenture executed to the Trustee
(or to the extent legally necessary to another trustee or additional or
separate trustee), in form satisfactory to the Trustee, effectively secure
(for so long as such other Indebtedness shall be so secured) all the
Securities equally and ratably with such Indebtedness and with any other
indebtedness similarly entitled to be equally and ratably secured. Such
supplemental indenture shall contain the provisions concerning the possession,
control, release and substitution of mortgaged and pledged property and
securities and other appropriate matters which are required by the Trust
Indenture Act of 1939 (as in effect at the date of execution of such
supplemental indenture) to be included in a secured indenture qualified under
the Trust Indenture Act of 1939, and may also contain such additional and
amendatory provisions permitted by the Trust Indenture Act of 1939 as the
Issuer and the Trustee shall deem advisable or appropriate or as the Trustee
shall deem necessary in connection with such pledge, mortgage, hypothecation
or grant of security interest.
For purpose of this Section 3.6, "security interest" shall include
the interest of the lessor under a lease with a term of three years or more
that should be, in accordance with generally accepted accounting principles,
recorded as a capital lease, and any such lease of property or assets not
acquired from the Issuer or any Restricted Subsidiary in contemplation of such
lease shall be treated as though the lessee had purchased such property or
assets from the lessor.
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 4.1. Issuer to Furnish Trustee Information as to Names and
Addresses of Securityholders. The Issuer and any other obligor on the
Securities covenant and agree that they will furnish or cause to be furnished
to the Trustee a list in such form as the Trustee may reasonably require of
the names and addresses of the Holders of the Securities of each series:
(a) semiannually and not more than 15 days after each January 1 and
July 1, and
(b) at such other times as the Trustee may request in writing,
within 15 days after receipt by the Issuer of any such request,
provided that if and so long as the Trustee shall be the registrar for such
series, such list shall not be required to be furnished.
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SECTION 4.2. Preservation and Disclosure of Securityholders Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders of
each series of Securities (i) contained in the most recent list furnished to
it as provided in Section 4.1, and (ii) received by it in the capacity of
registrar or paying agent for such series, if so acting. The Trustee may
destroy any list furnished to it as provided in Section 4.1 upon receipt of a
new list so furnished.
(b) In case three or more Holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to
the Trustee reasonable proof that each such applicant has owned a Security for
a period of at least six months preceding the date of such application, and
such application states that the applicants desire to communicate with other
Holders of Securities of a particular series (in which case the applicants
must all hold Securities of such series) or with Holders of all Securities
with respect to their rights under this Indenture or under such Securities and
such application is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt of such application, at its
election, either
(i) afford to such applicants access to the information
preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2, or
(ii) inform such applicants as to the approximate number of
Holders of Securities of such series or of all Securities, as the
case may be, whose names and addresses appear in the information
preserved at the time by the Trustee, in accordance with the
provisions of subsection (a) of this Section 4.2, and as to the
approximate cost of mailing to such Securityholders the form of
proxy or other communication, if any, specified in such application.
If the Trustee shall elect not to afford to such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of such series or all Holders of
Securities, as the case may be, whose name and address appears in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2 a copy of the form of proxy
or other communication which is specified in such request, with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the Holders
of Securities of such series or of all Securities, as the case may be, or
would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter
an order refusing to sustain any of such objections or if, after the entry of
an order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met, and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Securityholders with reasonable promptness
after the entry of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such applicants
respecting their application.
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(c) Each and every Holder of Securities, by receiving and holding the
same, agrees with the Issuer and the Trustee that neither the Issuer nor the
Trustee nor any agent of the Issuer or the Trustee shall be held accountable
by reason of the disclosure of any such information as to the names and
addresses of the Holders of Securities in accordance with the provisions of
subsection (b) of this Section 4.2, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under such
subsection (b).
SECTION 4.3. Reports by the Issuer. The Issuer covenants:
(a) to file with the Trustee, within 15 days after the Issuer is
required, as the case may be, to file the same with the Commission,
copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe)
which the Issuer may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act; or, if the Issuer is not
required to file information, documents or reports pursuant to either of
such Sections, then to file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents
and reports which may be required pursuant to Section 13 of the Exchange
Act, in respect of a debt security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules
and regulations;
(b) to file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants provided for
in this Indenture as may be required from time to time by such rules and
regulations;
(c) to transmit by mail to the Holders of Securities within 30 days
after the filing thereof with the Trustee, in the manner and to the
extent provided in Section 4.4(c), such summaries of any information,
documents and reports required to be filed by the Issuer pursuant to
subsections (a) and (b) of this Section 4.3 as may be required to be
transmitted to such Holders by rules and regulations prescribed from time
to time by the Commission; and
(d) to furnish to the Trustee, not less than annually, a brief
certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his knowledge of the
Issuer's compliance with all conditions and covenants under this
Indenture. For purposes of this subsection (d), such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture.
SECTION 4.4. Reports by the Trustee. (a) The Trustee shall transmit
to Holders such reports concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust Indenture Act of 1939 at
the times and in the manner provided pursuant thereto. To the extent that any
such report is required by the Trust Indenture Act of 1939 with respect to any
12 month period, such report shall cover the 12 month period ending July 15
and shall be transmitted by the next succeeding September 15.
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(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be furnished to the Issuer and be filed by
the Trustee with each stock exchange upon which the Securities of any
applicable series are listed and also with the Commission. The Issuer agrees
to promptly notify the Trustee with respect to any series when and as the
Securities of such series become admitted to trading on any national
securities exchange.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1. Events of Default. "Event of Default", wherever used
herein with respect to Securities of any series, means any one or more of the
following events (whatever the reason for such Event of Default), unless it is
either inapplicable to a particular series or it is specifically deleted or
modified in or pursuant to the Board Resolution or supplemental indenture
establishing such series of Securities or in the form of Security, for such
series:
(a) default in the payment of the principal of or premium, if
any, of the Securities of such series as and when the same shall
become due and payable either at maturity, upon redemption, by
declaration or otherwise; or
(b) default in the payment of any installment of interest on
any of the Securities of such series as and when the same shall
become due and payable, and continuance of such default for a period
of 30 days; or
(c) default in the payment or satisfaction of any sinking fund
or other purchase obligation with respect to Securities of such
series, as and when such obligation shall become due and payable; or
(d) failure on the part of the Issuer or a Guarantor duly to
observe or perform any other of the covenants or agreements on the
part of the Issuer in, or a Guarantor of, the Securities of such
series or in this Indenture continued for a period of 90 days after
the date on which written notice of such failure, requiring the
Issuer or a Guarantor to remedy the same, shall have been given by
certified or registered mail to the Issuer or a Guarantor by the
Trustee, or to the Issuer or a Guarantor and the Trustee by the
Holders of at least 25% in aggregate principal amount of the
Securities of such series then Outstanding; or
(e) without the consent of the Issuer, a court having
jurisdiction shall enter an order for relief with respect to the
Issuer or any of its Significant Subsidiaries under any applicable
bankruptcy, insolvency or other similar law of the United States of
America, any state thereof or the District of Columbia, or without
the consent of the Issuer, a court having jurisdiction shall enter a
judgment, order or decree adjudging the Issuer or any of its
Significant Subsidiaries bankrupt or insolvent, or enter an order
for relief for reorganization, arrangement, adjustment or
composition of or in respect of the Issuer or any of its Significant
Subsidiaries under any applicable bankruptcy, insolvency or other
similar law of the United States of America, any state thereof or
the District of Columbia,
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and the continuance of any such judgment, order or decree is
unstayed and in effect for a period of 60 consecutive days; or
(f) the Issuer or any of its Significant Subsidiaries shall
institute proceedings for entry of an order for relief with respect
to the Issuer or any of its Significant Subsidiaries under any
applicable bankruptcy, insolvency or other similar law of the United
States of America, any state thereof or the District of Columbia, or
for an adjudication of insolvency, or shall consent to the
institution of bankruptcy or insolvency proceedings against it, or
shall file a petition seeking, or seek or consent to reorganization,
arrangement, composition or relief under any applicable bankruptcy,
insolvency or other similar law of the United States of America, any
state thereof or the District of Columbia, or shall consent to the
filing of such petition or to the appointment of a receiver,
custodian, liquidator, assignee, trustee, sequestrator or similar
official of the Issuer or of substantially all of its property, or
the Issuer or any of its Significant Subsidiaries shall make a
general assignment for the benefit of creditors as recognized under
any applicable bankruptcy, insolvency or other similar law of the
United States of America, any state thereof or the District of
Columbia; or
(g) a Guarantee ceases to be in full force and effect (other
than in accordance with the terms of any Guarantee) or a Guarantor
denies or disaffirms its obligations under the Guarantee; or
(h) any other Event of Default provided with respect to the
Securities of such series.
If an Event of Default with respect to Securities of any series then
Outstanding occurs and is continuing, then and in each and every such case,
unless the principal of all of the Securities of such series shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Securities of such series then
Outstanding, by notice in writing to the Issuer (and to the Trustee if given
by Securityholders), may declare the principal (or, if the Securities of such
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of such series) of all the Securities
of such series and the interest, if any, accrued thereon to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, notwithstanding anything to the contrary
contained in this Indenture or in the Securities of such series. This
provision, however, is subject to the condition that, if at any time after the
unpaid principal amount (or such specified amount) of the Securities of such
series shall have been so declared due and payable and before any judgment or
decree for the payment of the moneys due shall have been obtained or entered
as hereinafter provided, the Issuer shall pay or shall deposit with the
Trustee a sum sufficient to pay all matured installments of interest, if any,
upon all of the Securities of such series and the principal of any and all
Securities of such series which shall have become due otherwise than by
acceleration (with interest on overdue installments of interest, if any, to
the extent that payment of such interest is enforceable under applicable law
and on such principal at the rate borne by the Securities of such series to
the date of such payment or deposit) and the reasonable compensation,
disbursements, expenses and advances of the Trustee and all other amounts due
the Trustee under Section 6.6, and any and all defaults under this Indenture,
other than the nonpayment of such portion of the principal amount
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of and accrued interest, if any, on Securities of such series which shall have
become due by acceleration, shall have been cured or shall have been waived in
accordance with Section 5.7 or provision deemed by the Trustee to be adequate
shall have been made therefor, then and in every such case the Holders of a
majority in aggregate principal amount of the Securities of such series then
Outstanding, by written notice to the Issuer and to the Trustee, may rescind
and annul such declaration and its consequences; but no such rescission and
annulment shall extend to or shall affect any subsequent default, or shall
impair any right consequent thereon. Notwithstanding the previous sentence, no
waiver shall be effective against any Holder for any Event of Default or event
which with notice or lapse of time or both would be an Event of Default with
respect to any covenant or provision which cannot be modified or amended
without the consent of the Holder of each outstanding Security affected
thereby, unless all such affected Holders agree, in writing, to waive such
Event of Default or other event.
If any Event of Default specified in Section 5.1(e) or 5.1(f) occurs
with respect to the Issuer, all unpaid principal amount (or, if the Securities
of any series then Outstanding are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of each such
series) and accrued interest on all Securities of each series then Outstanding
shall ipso facto become and be immediately due and payable without any
declaration or other act by the Trustee or any Securityholder.
If the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Issuer, the Trustee and the Securityholders shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Issuer, the Trustee and the Securityholders shall continue as
though no such proceeding had been taken.
Except with respect to an Event of Default pursuant to Section 5.1
(a), (b) or (c), the Trustee shall not be charged with knowledge of any Event
of Default unless written notice thereof shall have been given to a
Responsible Officer by the Issuer, a paying agent or any Securityholder.
SECTION 5.2. Payment of Securities on Default; Suit Therefor. The
Issuer covenants that (a) if default shall be made in the payment of any
installment of interest upon any of the Securities of any series then
Outstanding as and when the same shall become due and payable, and such
default shall have continued for a period of 30 days, or (b) if default shall
be made in the payment of the principal of any of the Securities of such
series as and when the same shall have become due and payable, whether at
maturity of the Securities of such series or upon redemption or by declaration
or otherwise, then, upon demand of the Trustee, the Issuer will pay to the
Trustee, for the benefit of the Holders of the Securities, the whole amount
that then shall have become due and payable on all such Securities of such
series for principal or interest, if any, or both, as the case may be, with
interest upon the overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) upon the overdue installments of
interest, if any, at the rate borne by the Securities of such series; and, in
addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including a reasonable compensation to the
Trustee, its agents, attorneys and counsel, and any expenses or liabilities
incurred by the Trustee hereunder other than through its negligence or bad
faith.
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If the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any
such judgment or final decree against the Issuer or any other obligor on the
Securities of such series and collect in the manner provided by law out of the
property of the Issuer or any other obligor on the Securities of such series,
wherever situated, the moneys adjudged or decreed to be payable.
If there shall be pending proceedings for the bankruptcy or for the
reorganization of the Issuer or any other obligor on the Securities of any
series then Outstanding under any bankruptcy, insolvency or other similar law
now or hereafter in effect, or if a receiver or trustee or similar official
shall have been appointed for the property of the Issuer or such other
obligor, or in the case of any other similar judicial proceedings relative to
the Issuer or other obligor upon the Securities of such series, or to the
creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of the Securities of such series shall
then be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand pursuant to
the provisions of this Section 5.2, shall be entitled and empowered by
intervention in such proceedings or otherwise to file and prove a claim or
claims for the whole amount of principal and interest, if any, owing and
unpaid in respect of the Securities of such series, and, in case of any
judicial proceedings, to 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 and of the Securityholders allowed in such judicial proceedings
relative to the Issuer or any other obligor on the Securities of such series,
its or their creditors, or its or their property, and to collect and receive
any moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses, and any
receiver, assignee or trustee or similar official in bankruptcy or
reorganization is hereby authorized by each of the Securityholders to make
such payments to the Trustee, and, if the Trustee shall consent to the making
of such payments directly to the Securityholders, to pay to the Trustee any
amount due it for compensation and expenses or otherwise pursuant to Section
6.6, including counsel fees and expenses incurred by it up to the date of such
distribution. To the extent that such payment of reasonable compensation,
expenses and counsel fees and expenses out of the estate in any such
proceedings shall be denied for any reason, payment of the same shall be
secured by a lien on, and shall be paid out of, any and all distributions,
dividends, moneys, securities and other property which the Holders of the
Securities of such series may be entitled to receive in such proceedings,
whether in liquidation or under any plan of reorganization or arrangement or
otherwise.
All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall be for the ratable benefit of the
Holders of the Securities of the series in respect of which such judgment has
been recovered.
SECTION 5.3. Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee pursuant to Section 5.2 with respect to Securities of
any series then Outstanding shall
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be applied in the order following, at the date or dates fixed by the Trustee
for the distribution of such moneys, upon presentation of the several
Securities of such series, and stamping thereon the payment, if only partially
paid, and upon surrender thereof, if fully paid:
FIRST: To the payment of costs and expenses of collection and
reasonable compensation to the Trustee, its agents, attorneys and
counsel, and of all other expenses and liabilities incurred, and all
advances made, by the Trustee pursuant to Section 6.6 except as a
result of its negligence or bad faith;
SECOND: If the principal of the Outstanding Securities of such
series shall not have become due and be unpaid, to the payment of
interest, if any, on the Securities of such series, in the order of
the maturity of the installments of such interest, if any, with
interest (to the extent that such interest has been collected by the
Trustee) upon the overdue installments of interest, if any, at the
rate borne by the Securities of such series, such payment to be made
ratably to the Persons entitled thereto;
THIRD: If the principal of the Outstanding Securities of such
series shall have become due, by declaration or otherwise, to the
payment of the whole amount then owing and unpaid upon the
Securities of such series for principal and interest, if any, with
interest on the overdue principal and (to the extent that such
interest has been collected by the Trustee) upon overdue
installments of interest, if any, at the rate borne by the
Securities of such series; and in case such moneys shall be
insufficient to pay in full the whole amounts so due and unpaid upon
the Securities of such series, then to the payment of such principal
and interest, if any, without preference or priority of principal
over interest or of interest over principal, or of any installment
of interest over any other installment of interest, or of any
Security over any other Security, ratably to the aggregate of such
principal and accrued and unpaid interest; and
FOURTH: To the payment of any surplus then remaining to the
Issuer, its successors or assigns, or to whomsoever may be lawfully
entitled to receive the same.
No claim for interest which in any manner at or after maturity shall
have been transferred or pledged separate or apart from the Securities to
which it relates, or which in any manner shall have been kept alive after
maturity by an extension (otherwise than pursuant to an extension made
pursuant to a plan proposed by the Issuer to the Holders of all Securities of
any series then Outstanding), purchase, funding or otherwise by or on behalf
or with the consent or approval of the Issuer shall be entitled, in case of a
default hereunder, to any benefit of this Indenture, except after prior
payment in full of the principal of all Securities of any series then
Outstanding and of all claims for interest not so transferred, pledged, kept
alive, extended, purchased or funded.
SECTION 5.4. Proceedings by Securityholders. No Holder of any
Securities of any series then Outstanding shall have any right by virtue of or
by availing of any provision of this Indenture to institute any suit, action
or proceeding in equity or at law upon or under or with respect to this
Indenture or for the appointment of a receiver or trustee or similar official,
or for any other remedy hereunder, unless such Holder previously shall have
given to the Trustee written notice of default and of the continuance thereof,
as hereinbefore provided, and unless the Holders of not less than 25% in
aggregate principal amount of the Securities of such series then
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Outstanding shall have made written request to the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit
or proceeding, it being understood and intended, and being expressly
covenanted by the Holder of every Security of such series with every other
Holder and the Trustee, that no one or more Holders of Securities of such
series shall have any right in any manner whatever by virtue of or by availing
of any provision of this Indenture or of the Securities to affect, disturb or
prejudice the rights of any other Holder of such Securities of such series, or
to obtain or seek to obtain priority over or preference as to any other such
Holder, or to enforce any right under this Indenture or the Securities, except
in the manner herein provided and for the equal, ratable and common benefit of
all Holders of Securities of such series.
Notwithstanding any other provisions in this Indenture, however, the
right of any Holder of any Security to receive payment of the principal of,
premium, if any, and interest, if any, on such Security, on or after the
respective due dates expressed in such Security, or to institute suit for the
enforcement of any such payment on or after such respective dates shall not be
impaired or affected without the consent of such Holder.
SECTION 5.5. Proceedings by Trustee. In case of an Event of Default
hereunder, the Trustee may in its discretion proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any of such rights, either by suit in equity or by action at law or by
proceedings in bankruptcy or otherwise, whether for the specific enforcement
of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other legal
or equitable right vested in the Trustee by this Indenture or by law.
SECTION 5.6. Remedies Cumulative and Continuing. All powers and
remedies given by this Article Five to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive
of any thereof or of any other powers and remedies available to the Trustee or
the Securityholders, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture, and no delay or omission of the Trustee or of any Securityholder to
exercise any right or power accruing upon any default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be
a waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 5.4, every power and remedy given by this Article Five
or by law to the Trustee or to the Securityholders may be exercised from time
to time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
SECTION 5.7. Direction of Proceedings; Waiver of Defaults by
Majority of Securityholders. The Holders of a majority in aggregate principal
amount of the Securities of any series then Outstanding shall have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to Securities of such series; provided, however, that
(subject to the provisions of Section 6.1) the Trustee shall have the right to
decline to follow any
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such direction if the Trustee shall determine upon advice of counsel that the
action or proceeding so directed may not lawfully be taken or if the Trustee
in good faith by its board of directors, its executive committee, or a trust
committee of directors or Responsible Officers or both shall determine that
the action or proceeding so directed would involve the Trustee in personal
liability. The Holders of a majority in aggregate principal amount of the
Securities of any series then Outstanding may on behalf of the Holders of all
of the Securities of such series waive any past default or Event of Default
hereunder and its consequences except a default in the payment of interest, if
any, on, or the principal of, the Securities of such series. Upon any such
waiver the Issuer, the Trustee and the Holders of the Securities of such
series shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon. Whenever
any default or Event of Default hereunder shall have been waived as permitted
by this Section 5.7, said default or Event of Default shall for all purposes
of the Securities and this Indenture be deemed to have been cured and to be
not continuing.
SECTION 5.8. Notice of Defaults. The Trustee shall, within 90 days
after the occurrence of a default, with respect to Securities of any series
then Outstanding, mail to all Holders of Securities of such series, as the
names and the addresses of such Holders appear upon the Securities register,
notice of all defaults known to the Trustee with respect to such series,
unless such defaults shall have been cured before the giving of such notice
(the term "defaults" for the purpose of this Section 5.8 being hereby defined
to be the events specified in clauses (a), (b), (c), (d), (e), (f), (g) and
(h) of Section 5.1, not including periods of grace, if any, provided for
therein and irrespective of the giving of the written notice specified in said
clause (d) but in the case of any default of the character specified in said
clause (d) no such notice to Securityholders shall be given until at least 60
days after the giving of written notice thereof to the Issuer pursuant to said
clause (d)); provided, however, that, except in the case of default in the
payment of the principal of or interest, if any, on any of the Securities, or
in the payment or satisfaction of any sinking fund or other purchase
obligation, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee, or a trust
committee of directors or Responsible Officers or both of the Trustee in good
faith determines that the withholding of such notice is in the best interests
of the Securityholders.
SECTION 5.9. Undertaking to Pay Costs. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the
cost of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 5.9 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Securityholder, or group of Securityholders, holding in the
aggregate more than 10% in principal amount of the Securities of any series
then Outstanding, or to any suit instituted by any Securityholders for the
enforcement of the payment of the principal of or interest, if any, on any
Security against the Issuer on or after the due date expressed in such
Security.
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ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1. Duties and Responsibilities of the Trustee; During
Default; Prior to Default. In case an Event of Default with respect to the
Securities of a series has occurred (which has not been cured or waived) the
Trustee shall exercise with respect to such series of Securities 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 man would exercise or use under
the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with respect
to the Securities of any series and after the curing or waiving of
all such Events of Default with respect to such series which may
have occurred:
(i) the duties and obligations of the Trustee with respect
to the Securities of any series shall be determined solely by
the express provisions of this Indenture, and the Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers
of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders pursuant to Section 5.7 relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for
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believing that the repayment of such funds or adequate indemnity against such
liability is not reasonably assured to it.
SECTION 6.2. Certain Rights of the Trustee. Subject to Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture, note, coupon, security or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request, direction, order or demand of the Issuer mentioned
herein shall be sufficiently evidenced by an Officers' Certificate or
Issuer Order (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors
may be evidenced to the Trustee by a Board Resolution;
(c) the Trustee may consult with counsel of its selection and any
advice of such counsel promptly confirmed in writing shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted to be taken by it hereunder in good faith and in
reliance thereon in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of
this Indenture (including, without limitation, pursuant to Section 5.7),
unless such Securityholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall
not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, appraisal, bond, debenture,
note, coupon, security, or other paper or document unless requested in
writing so to do by the Holders of not less than a majority in aggregate
principal amount of the Securities of all series affected then
Outstanding; provided that, if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded
to it by the terms of this Indenture, the Trustee may require reasonable
indemnity against such expenses or liabilities as a condition to
proceeding; the reasonable expenses of every such investigation shall be
paid by the Issuer or, if paid by the Trustee or any predecessor Trustee,
shall be repaid by the Issuer upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the
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Trustee shall not be responsible for any misconduct or negligence on the
part of any such agent or attorney appointed with due care by it
hereunder;
(h) the Trustee shall not be charged with knowledge of any default
or Event of Default with respect to a series of Securities unless either
(i) a Responsible Officer of the Trustee assigned to the Corporate Trust
Office of the Trustee (or any successor division or department of the
Trustee) shall have actual knowledge of such default or Event of Default
or (ii) written notice of such default or Event of Default shall have
been given to the Trustee by the Issuer or any other obligor on such
series of Securities or by any Holder of Securities of such series; and
(i) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
SECTION 6.3. Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture, of the
Securities or of any prospectus used to sell the Securities. The Trustee shall
not be accountable for the use or application by the Issuer of any of the
Securities or of the proceeds thereof.
SECTION 6.4. Trustee and Agents May Hold Securities; Collections,
etc. The Trustee or any agent of the Issuer or the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee or such agent and,
subject to Sections 6.8 and 6.13, may otherwise deal with the Issuer and
receive, collect, hold and retain collections from the Issuer with the same
rights it would have if it were not the Trustee or such agent.
SECTION 6.5. Moneys Held by Trustee. Subject to the provisions of
Section 10.4 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the
extent required by mandatory provisions of law. Neither the Trustee nor any
agent of the Issuer or the Trustee shall be under any liability for interest
on any moneys received by it hereunder.
SECTION 6.6. Compensation and Indemnification of Trustee and Its
Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such compensation as shall be
agreed to in writing between the Issuer and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust) and the Issuer covenants and agrees to pay or reimburse the
Trustee and each predecessor Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by or on behalf of it in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad
faith. The Issuer also covenants to indemnify the Trustee and each predecessor
Trustee for, and to hold it harmless against, any and all loss,
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liability, damage, claim or expense, including taxes (other than taxes based
on the income of the Trustee), incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration of
this Indenture or the trusts hereunder and its duties hereunder, including the
costs and expenses of defending itself against or investigating any claim or
liability in the premises. The obligations of the Issuer under this Section
6.6 to compensate and indemnify the Trustee and each predecessor Trustee and
to pay or reimburse the Trustee and each predecessor Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Trustee. Such additional indebtedness shall be a
senior claim to that of the Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit
of the Holders of particular Securities. When the Trustee incurs expenses or
renders services in connection with an Event of Default specified in Section
5.1 or in connection with Article Five hereof, the expenses (including the
reasonable fees and expenses of its counsel) and the compensation for the
service in connection therewith are intended to constitute expenses of
administration under any bankruptcy law. The provisions of this Section 6.6
shall survive the resignation or removal of the Trustee and the termination of
this Indenture.
SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc.
Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts
of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered
or omitted by it under the provisions of this Indenture upon the faith
thereof.
SECTION 6.8. Qualification of Trustee; Conflicting Interests. This
Indenture shall always have a Trustee who satisfies the requirements of
Section 310(a)(1) of the Trust Indenture Act of 1939. The Trustee shall have a
combined capital and surplus of at least $25,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with
Section 310(b) of the Trust Indenture Act of 1939 regarding disqualification
of a trustee upon acquiring a conflicting interest.
SECTION 6.9. Persons Eligible for Appointment as Trustee; Different
Trustees for Different Series. The Trustee for each series of Securities
hereunder shall at all times be a corporation organized and doing business
under the laws of the United States of America or of any state or the District
of Columbia having a combined capital and surplus of at least $25,000,000, and
which is authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal, state or District of
Columbia authority, or a corporation or other Person permitted to act as
trustee by the Commission. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. No obligor upon the Securities or any Affiliate of
such obligor shall serve as trustee upon the Securities. In case at any time
the
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Trustee shall cease to be eligible in accordance with the provisions of this
Section 6.9, the Trustee shall resign immediately in the manner and with the
effect specified in Section 6.10.
A different Trustee may be appointed by the Issuer for each series of
Securities prior to the issuance of such Securities. If the initial Trustee
for any series of Securities is to be a trustee other than First Union
National Bank, the Issuer and such Trustee shall, prior to the issuance of
such Securities, execute and deliver an indenture supplemental hereto, which
shall provide for the appointment of such Trustee as Trustee for the
Securities of such series and shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustee.
SECTION 6.10. Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign with respect to one or more or all series of Securities by
giving written notice of resignation to the Issuer. Upon receiving such notice
of resignation, the Issuer shall promptly appoint a successor trustee or
trustees with respect to the applicable series by written instrument in
duplicate, executed by authority of the Board of Directors, one copy of which
instrument shall be delivered to the resigning trustee and one copy to the
successor trustee or trustees. If no successor trustee shall have been so
appointed with respect to any series and have accepted appointment within 30
days after the mailing of such notice of resignation, the resigning trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee, or any Securityholder who has been a bona fide Holder of a
Security or Securities of the applicable series for at least six months may,
subject to the provisions of Section 5.9, on behalf of himself and all others
similarly situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 6.8 with respect to any series of Securities after written
request therefor by the Issuer or by any Securityholder who has been
a bona fide Holder of a Security or Securities of such series for at
least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.9 and shall fail to resign after written
request therefor by the Issuer or by any such Securityholder; or
(iii) the Trustee shall become incapable of acting with respect
to any series of Securities, or shall be adjudged a bankrupt or
insolvent, or a receiver or liquidator of the Trustee or of its
property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;
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then, in any such case, the Issuer may remove the Trustee with respect to
the applicable series of Securities and appoint a successor trustee for
such series by written instrument, in duplicate, executed by order of the
Board of Directors one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to
the provisions of Article Five, any Securityholder who has been a bona
fide Holder of a Security or Securities of such series for at least six
months may on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor trustee with respect to such
series. Such court may thereupon, after such notice, if any, as it may
deem proper and prescribe, remove the Trustee and appoint a successor
trustee.
(c) The Holders of a majority in aggregate principal amount of the
Securities of each series then Outstanding may at any time remove the
Trustee with respect to Securities of such series and appoint a successor
trustee with respect to the Securities of such series by delivering to
the Trustee so removed, to the successor trustee so appointed and to the
Issuer the evidence provided for in Section 7.1 of the action in that
regard taken by the Securityholders. If no successor trustee shall have
been so appointed with respect to any series and have accepted
appointment within 30 days after the delivery of such evidence of
removal, the Trustee may petition any court of competent jurisdiction for
the appointment of a successor trustee, or any Securityholder who has
been a bona fide Holder of a Security or Securities of the applicable
series for at least six months may, subject to the provisions of Section
5.9, on behalf of himself and all others similarly situated, petition any
such court for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(d) Any resignation or removal of the Trustee with respect to any
series and any appointment of a successor trustee with respect to such
series pursuant to any of the provisions of this Section 6.10 shall
become effective upon acceptance of appointment by the successor trustee
as provided in Section 6.11.
SECTION 6.11. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and
obligations with respect to such series of its predecessor hereunder, with
like effect as if originally named as trustee for such series hereunder; but,
nevertheless, on the written request of the Issuer or of the successor
trustee, upon payment of its charges then unpaid, the trustee ceasing to act
shall, subject to Section 10.4, pay over to the successor trustee all moneys
at the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Issuer shall
execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.6.
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If a successor trustee is appointed with respect to the Securities of
one or more (but not all) series, the Issuer, the predecessor Trustee and each
successor trustee with respect to the Securities of any applicable series
shall execute and deliver an indenture supplemental hereto which shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the predecessor Trustee with respect
to the Securities of any series as to which the predecessor Trustee is not
retiring shall continue to be vested in the predecessor Trustee, and shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such trustees co-trustees of the same
trust and that each such trustee shall be trustee of a trust or trusts under
separate indentures.
No successor trustee with respect to any series of Securities shall
accept appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor trustee shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9.
Upon acceptance of appointment by any successor trustee as provided
in this Section 6.11, the Issuer shall give notice thereof to the Holders of
Securities of each series affected, by mailing such notice to such Holders at
their addresses as they shall appear on the registry books. If the Issuer
fails to give such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
given at the expense of the Issuer.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee (including the trust created by this
Indenture), shall be the successor of the Trustee hereunder, provided that
such corporation shall be qualified under the provisions of Section 6.8 and
eligible under the provisions of Section 6.9, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any of the Securities of any series shall
have been authenticated but not delivered, any such successor to the Trustee
may adopt the certificate of authentication of any predecessor Trustee and
deliver such Securities so authenticated; and, in case at that time any of the
Securities of any series shall not have been authenticated, any successor to
the Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor Trustee; and in all such
cases such certificate shall have the full force which it is anywhere in the
Securities of such series or in this Indenture provided that the certificate
of the Trustee shall have; provided, that the right to adopt the certificate
of authentication of any predecessor Trustee or to authenticate Securities of
any series in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 6.13. Preferential Collection of Claims Against the Issuer.
The Trustee shall comply with Section 311(a) of the Trust Indenture Act of
1939, excluding any creditor
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relationship listed in Section 311(b) of the Trust Indenture Act of 1939. A
Trustee who has resigned or been removed shall be subject to Section 311(a) of
the Trust Indenture Act of 1939 to the extent indicated therein.
SECTION 6.14. Appointment of Authenticating Agent. As long as any
Securities of a series remain Outstanding, the Trustee may, by an instrument
in writing, appoint with the approval of the Issuer an authenticating agent
(the "Authenticating Agent") which shall be authorized to act on behalf of the
Trustee to authenticate Securities, including Securities issued upon exchange,
registration of transfer, partial redemption or pursuant to Section 2.9.
Securities of each such series authenticated by such Authenticating Agent
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee. Whenever
reference is made in this Indenture to the authentication and delivery of
Securities of any series by the Trustee or to the Trustee's Certificate of
Authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent for such series
and a Certificate of Authentication executed on behalf of the Trustee by such
Authenticating Agent. Such Authenticating Agent shall at all times be a
corporation organized and doing business under the laws of the United States
of America or of any state or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $25,000,000 (determined as provided in Section 6.9 with respect to
the Trustee) and subject to supervision or examination by federal or state
authority.
Any corporation into which any Authenticating Agent may be merged or
converted, or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency
business (including the authenticating agency contemplated by this Indenture)
of any Authenticating Agent, shall continue to be the Authenticating Agent
with respect to all series of Securities for which it served as Authenticating
Agent without the execution or filing of any paper or any further act on the
part of the Trustee or such Authenticating Agent. Any Authenticating Agent may
at any time, and if it shall cease to be eligible shall, resign by giving
written notice of resignation to the Trustee and to the Issuer. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to the Issuer.
Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 6.14 with respect
to one or more series of Securities, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Issuer and the Issuer
shall provide notice of such appointment to all Holders of Securities of such
series in the manner and to the extent provided in Section 11.4. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as Authenticating Agent.
The Issuer agrees to pay to the Authenticating Agent for such series from time
to time reasonable compensation. The Authenticating Agent for the Securities
of any series shall have no responsibility or liability for any action taken
by it as such at the direction of the Trustee.
Sections 6.2, 6.3, 6.4 and 7.3 shall be applicable to any
Authenticating Agent.
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ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1. Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in principal amount of the Securityholders of any or all series may
be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such specified percentage of Securityholders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee. Proof of execution of any instrument
or of a writing appointing any such agent shall be sufficient for any purpose
of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of
the Trustee and the Issuer, if made in the manner provided in this Article
Seven.
SECTION 7.2. Proof of Execution of Instruments and of Holding of
Securities. Subject to Sections 6.1 and 6.2, the execution of any instrument
by a Securityholder or his agent or proxy may be proved in the following
manner:
(a) The fact and date of the execution by any Holder of any
instrument may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments
of deeds or administer oaths that the person executing such
instruments acknowledged to him the execution thereof, or by an
affidavit of a witness to such execution sworn to before any such
notary or other such officer. Where such execution is by or on
behalf of any legal entity other than an individual, such
certificate or affidavit shall also constitute sufficient proof of
the authority of the person executing the same.
(b) The ownership of Securities shall be proved by the Security
register or by a certificate of the Security registrar.
SECTION 7.3. Holders to be Treated as Owners. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the
Person in whose name any Security shall be registered upon the Security
register for such series as the absolute owner of such Security (whether or
not such Security shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of and, subject to the provisions of this
Indenture, interest, if any, on such Security and for all other purposes; and
neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee
shall be affected by any notice to the contrary.
SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Outstanding Securities of any or all series have concurred in any direction,
consent or waiver under this Indenture, Securities which are owned by the
Issuer or any other obligor on the Securities with respect to which such
determination is being made or by any Affiliate of the Issuer or any other
obligor on the Securities with respect to which such determination is being
made shall be disregarded and deemed not to be Outstanding for the purpose of
any such determination, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction,
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consent or waiver only Securities which a Responsible Officer of the Trustee
knows are so owned shall be so disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Issuer or any
other obligor upon the Securities or any Affiliate of the Issuer or any other
obligor on the Securities. In case of a dispute as to such right, the advice
of counsel shall be full protection in respect of any decision made by the
Trustee in accordance with such advice. Upon request of the Trustee, the
Issuer shall furnish to the Trustee promptly an Officers' Certificate listing
and identifying all Securities, if any, known by the Issuer to be owned or
held by or for the account of any of the above-described Persons; and, subject
to Sections 6.1 and 6.2, the Trustee shall be entitled to accept such
Officers' Certificate as conclusive evidence of the facts therein set forth
and of the fact that all Securities not listed therein are Outstanding for the
purpose of any such determination.
SECTION 7.5. Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Trustee, as provided in Section 7.1,
of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action, any Holder of a
Security the serial number of which is shown by the evidence to be included
among the serial numbers of the Securities the Holders of which have consented
to such action may, by filing written notice at the Corporate Trust Office and
upon proof of holding as provided in this Article Seven, revoke such action so
far as concerns such Security provided that such revocation shall not become
effective until three Business Days after such filing. Except as aforesaid,
any such action taken by the Holder of any Security shall be conclusive and
binding upon such Holder and upon all future Holders and owners of such
Security and of any Securities issued in exchange or substitution therefor or
on registration of transfer thereof, irrespective of whether or not any
notation in regard thereto is made upon any such Security. Any action taken by
the Holders of the percentage in aggregate principal amount of the Securities
of any or all series, as the case may be, specified in this Indenture in
connection with such action shall be conclusively binding upon the Issuer, the
Trustee and the Holders of all the Securities affected by such action.
SECTION 7.6. Record Date for Consents and Waivers. The Issuer may,
but shall not be obligated to, establish a record date for the purpose of
determining the Persons entitled to (i) waive any past default with respect to
the Securities of such series in accordance with Section 5.7 of the Indenture,
(ii) consent to any supplemental indenture in accordance with Section 8.2 of
the Indenture or (iii) waive compliance with any term, condition or provision
of any covenant hereunder. If a record date is fixed, the Holders on such
record date, or their duly designated proxies, and any such Persons, shall be
entitled to waive any such past default, consent to any such supplemental
indenture or waive compliance with any such term, condition or provision,
whether or not such Holder remains a Holder after such record date; provided,
however, that unless such waiver or consent is obtained from the Holders, or
duly designated proxies, of the requisite principal amount of Outstanding
Securities of such series prior to the date which is the 120th day after such
record date, any such waiver or consent previously given shall automatically
and, without further action by any Holder be cancelled and of no further
effect.
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ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a Board Resolution (which
resolution may provide general terms or parameters for such action and may
provide that the specific terms of such action may be determined in accordance
with or pursuant to an Issuer Order), and the Trustee may from time to time
and at any time enter into an indenture or indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act of 1939 as
in force at the date of the execution thereof) for one or more of the
following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Securities of one or more series any
property or assets;
(b) to evidence the succession of another Person to the Issuer
or successive successions, and the assumption by the successor
Person of the covenants, agreements and obligations of the Issuer
herein and in the Securities;
(c) to add to the covenants of the Issuer such further
covenants, restrictions, conditions or provisions for the protection
of the Holders of all or any series of Securities (and if such
covenants, restrictions, conditions or provisions are to be for the
protection of less than all series of Securities, stating that the
same are expressly being included solely for the protection of such
series), or to surrender any right or power herein conferred upon
the Issuer, and to make the occurrence, or the occurrence and
continuance, of a default in any such additional covenants,
restrictions, conditions or provisions an Event of Default
permitting the enforcement of all or any of the several remedies
provided in this Indenture as herein set forth; provided, however,
that in respect of any such additional covenant, restriction,
condition or provision such supplemental indenture may provide for a
particular period of grace after default (which period may be
shorter or longer than that allowed in the case of other defaults)
or may provide for an immediate enforcement upon such an Event of
Default or may limit the remedies available to the Trustee upon such
an Event of Default or may limit the right of the Holders of a
majority in aggregate principal amount of the Securities of such
series to waive such an Event of Default;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which
may be defective or inconsistent with any other provision contained
herein or in any supplemental indenture, or to make any other
provisions as the Issuer may deem necessary or desirable, provided,
however, that no such action shall materially adversely affect the
interests of the Holders of the Securities;
(e) to establish the form or terms of Securities or the
Guarantees to be endorsed thereon of any series as permitted by
Sections 2.1 and 2.3;
(f) to provide for the issuance of Securities of any series in
coupon form (including Securities registrable as to principal only)
and to provide for exchangeability
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of such Securities for the Securities issued hereunder in fully
registered form and to make all appropriate changes for such
purpose;
(g) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the Trust Indenture Act of
1939, or under any similar federal statute hereafter enacted, and to
add to this Indenture such other provisions as may be expressly
permitted by the Trust Indenture Act of 1939, excluding, however,
the provisions referred to in Section 316(a)(2) of the Trust
Indenture Act of 1939 as in effect at the date as of which this
instrument was executed or any corresponding provision provided for
in any similar federal statute hereafter enacted;
(h) to evidence and provide for the acceptance of appointment
hereunder of a Trustee other than First Union National Bank as
Trustee for a series of Securities and to add to or change any of
the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 6.9
hereof;
(i) subject to Section 8.2 hereof, to add to or modify the
provisions hereof as may be necessary or desirable to provide for
the denomination of Securities in foreign currencies which shall not
adversely affect the interests of the Holders of the Securities in
any material respect;
(j) to modify the covenants or Events of Default of the Issuer
solely in respect of, or add new covenants or Events of Default of
the Issuer that apply solely to, Securities not Outstanding on the
date of such supplemental indenture; and
(k) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of
one or more series and to add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one trustee,
pursuant to the requirements of Section 6.11.
The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the
Securities then Outstanding, notwithstanding any of the provisions of Section
8.2.
SECTION 8.2. Supplemental Indentures with Consent of
Securityholders. With the consent (evidenced as provided in Article Seven) of
the Holders of not less than a majority in aggregate principal amount of the
Securities then Outstanding of any series affected by such supplemental
indenture, the Issuer, when authorized by a Board Resolution (which resolution
may provide general terms or parameters for such action and may provide that
the specific terms
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of such action may be determined in accordance with or pursuant to an Issuer
Order), and the Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act of 1939 as in force at the date of
execution thereof) for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Securities of such series; provided, that no such supplemental
indenture shall (a) extend the stated final maturity of the principal of any
Security, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest, if any, thereon (or, in the case of an
Original Issue Discount Security, reduce the rate of accretion of original
issue discount thereon), or reduce or alter the method of computation of any
amount payable on redemption, repayment or purchase by the Issuer thereof (or
the time at which any such redemption, repayment or purchase may be made), or
make the principal thereof (including any amount in respect of original issue
discount), or interest, if any, thereon payable in any coin or currency other
than that provided in the Securities or in accordance with the terms of the
Securities, or reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon an acceleration of the
maturity thereof pursuant to Section 5.1 or the amount thereof provable in
bankruptcy pursuant to Section 5.2, or impair or affect the right of any
Securityholder to institute suit for the payment thereof or, if the Securities
provide therefor, any right of repayment or purchase at the option of the
Securityholder, in each case without the consent of the Holder of each
Security so affected, or (b) reduce the aforesaid percentage of Securities of
any series, the consent of the Holders of which is required for any such
supplemental indenture, without the consent of the Holders of each Security so
affected. No consent of any Holder of any Security shall be necessary under
this Section 8.2 to permit the Trustee and the Issuer to execute supplemental
indentures pursuant to Sections 8.1 and 9.2.
A supplemental indenture which changes or eliminates any covenant,
Event of Default or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series of
Securities, or which modifies the rights of Holders of Securities of such
series, with respect to such covenant or provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any
other series.
Upon the request of the Issuer, accompanied by a copy of a resolution
of the Board of Directors (which resolution may provide general terms or
parameters for such action and may provide that the specific terms of such
action may be determined in accordance with or pursuant to an Issuer Order)
certified by the secretary or an assistant secretary of the Issuer authorizing
the execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of the Holders of the Securities as
aforesaid and other documents, if any, required by Section 7.1, the Trustee
shall join with the Issuer in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may at
its discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Securityholders
under this Section 8.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof.
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Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 8.2, the
Issuer (or the Trustee at the request and expense of the Issuer) shall give
notice thereof to the Holders of then Outstanding Securities of each series
affected thereby, as provided in Section 11.4. Any failure of the Issuer to
give such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
SECTION 8.3. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Trustee, the Issuer and the
Holders of Securities of each series affected thereby shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and shall be deemed to be part of the terms
and conditions of this Indenture for any and all purposes.
SECTION 8.4. Documents to Be Given to Trustee. The Trustee, subject
to the provisions of Sections 6.1 and 6.2, shall be entitled to receive an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant to this Article Eight complies
with the applicable provisions of this Indenture and that all conditions
precedent to the execution and delivery of such supplemental indenture have
been satisfied.
SECTION 8.5. Notation on Securities in Respect of Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article Eight may bear a notation in form approved by the Trustee for such
series as to any matter provided for by such supplemental indenture or as to
any action taken by Securityholders. If the Issuer or the Trustee shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Issuer, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by
the Issuer, and such Securities may be authenticated by the Trustee and
delivered in exchange for the Securities of such series then Outstanding.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR OTHER
DISPOSITION
SECTION 9.1. Consolidation Permitted, etc., on Certain Terms. Subject
to the provisions of Section 9.2, nothing contained in this Indenture or in
any of the Securities shall prevent any consolidation or merger of the Issuer
with or into any other Person or Persons (whether or not affiliated with the
Issuer), or successive consolidations or mergers in which the Issuer or their
successor or successors shall be a party or parties, or shall prevent any
sale, lease, exchange or other disposition of all or substantially all the
property and assets of the Issuer to any other Person (whether or not
affiliated with the Issuer) authorized to acquire and operate the same;
provided, however, and the Issuer hereby covenants and agrees, that any such
consolidation, merger, sale, lease, exchange or other disposition shall be
upon the conditions that (a) immediately after giving effect to such
consolidation, merger, sale, lease, exchange or other disposition of the
Person (whether the Issuer or such other Person) formed by or surviving any
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such consolidation or merger, or to which such sale, lease, exchange or other
disposition shall have been made, no Event of Default, and no event which
after notice or lapse of time or both, would become an Event of Default, shall
have occurred and be continuing; (b) the Person (if other than the Issuer)
formed by or surviving any such consolidation or merger, or to which such
sale, lease, exchange or other disposition shall have been made, shall be a
corporation or partnership organized under the laws of the United States of
America, any state thereof or the District of Columbia; and (c) the due and
punctual payment of the principal of and interest, if any, on all the
Securities, according to their tenor, and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed by the Issuer, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee executed and delivered to the Trustee, by
the Person (if other than the Issuer) formed by such consolidation, or into
which the Issuer shall have been merged, or by the Person which shall have
acquired or leased such property.
SECTION 9.2. Successor Corporation to be Substituted. In case of any
such consolidation or merger or any sale, conveyance or lease of all or
substantially all of the property of the Issuer and upon the assumption by the
successor Person, by supplemental indenture executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of, premium, if any, and interest, if any, on all of
the Securities and the due and punctual performance of all of the covenants
and conditions of this Indenture to be performed by the Issuer, such successor
Person shall succeed to and be substituted for the Issuer, with the same
effect as if it had been named herein as the party of the first part, and the
Issuer (including any intervening successor to the Issuer which shall have
become the obligor hereunder) shall be relieved of any further obligation
under this Indenture and the Securities; provided, however, that in the case
of a sale, lease, exchange or other disposition of the property and assets of
the Issuer (including any such intervening successor), the Issuer (including
any such intervening successor) shall continue to be liable on its obligations
under this Indenture and the Securities to the extent, but only to the extent,
of liability to pay the principal of, premium, if any, and interest, if any,
on the Securities at the time, places and rate prescribed in this Indenture
and the Securities. Such successor Person thereupon may cause to be signed,
and may issue either in its own name or in the name of the Issuer, any or all
of the Securities issuable hereunder which theretofore shall not have been
signed by the Issuer and delivered to the Trustee; and, upon the order of such
successor Person instead of the Issuer and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously shall have been
signed and delivered by the officers of the Issuer to the Trustee for
authentication, and any Securities which such successor Person thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All
the Securities so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or thereafter
issued in accordance with the terms of this Indenture as though all of such
Securities had been issued at the date of the execution hereof.
In case of any such consolidation or merger or any sale, lease,
exchange or other disposition of all or substantially all of the property and
assets of the Issuer, such changes in phraseology and form (but not in
substance) may be made in the Securities, thereafter to be issued, as may be
appropriate.
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SECTION 9.3. Opinion of Counsel to be Given Trustee. The Trustee,
subject to Sections 6.1 and 6.2, shall receive an Officers' Certificate and
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, lease, exchange or other disposition and any such assumption complies
with the provisions of this Article Nine.
ARTICLE TEN
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 10.1. Applicability of Article. Unless specified otherwise
pursuant to Section 2.3 for Securities of a series, this Article shall apply
to each series of Securities issued under this Indenture.
SECTION 10.2. Legal Defeasance And Discharge. The Issuer shall,
subject to the satisfaction of the conditions set forth in Section 10.4
hereof, be deemed to have been discharged from its obligations with respect to
all Outstanding Securities on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Issuer shall be deemed to have paid and discharged
the entire Indebtedness represented by the Outstanding Securities, which shall
thereafter be deemed to be Outstanding only for the purposes of Section 10.5
hereof and the other Sections of this Indenture referred to in clauses (a) and
(b) below, and to have satisfied all of its obligations under such Securities
and this Indenture (and the Trustee, on demand of and at the expense of the
Issuer, shall execute proper instruments delivered to it by the Issuer
acknowledging the same), except of the following provisions which shall
survive until otherwise terminated or discharged hereunder; (a) the rights of
Holder of Outstanding Securities to receive payments in respect of the
principal of, premium, if any, and interest on such Securities when such
payments are due from the trust referred to below; (b) the Issuer's
obligations with respect to the Securities concerning mutilated, destroyed,
lost or stolen Securities and the maintenance of an office or agency for
payment and money for security payments held in trust; (c) the rights, powers,
trusts, duties and immunities of the Trustee, and the Issuer's obligations in
connection therewith; and (d) the Legal Defeasance provisions of this
Indenture.
SECTION 10.3. Covenant Defeasance. The Issuer shall, subject to the
satisfaction of the conditions set forth in Section 10.4 hereof, be released
from its obligations under the covenants contained in Articled Nine and to the
extent described in the applicable supplemental indenture, with respect to any
series of Securities, with respect to the Outstanding Securities on and after
the date of the conditions set forth in Section 10.4 are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not Outstanding for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed Outstanding
for all other purposes hereunder (it being understood that such Securities
shall not be deemed outstanding for accounting purposes). For this purpose,
Covenant Defeasance means that, with respect to the Outstanding Securities,
the Issuer may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall
not constitute a default or an Event of Default
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under Section 5.1 hereof, but, except as specified above, the remainder of
this Indenture and such Securities shall be unaffected thereby. Subject to the
satisfaction of the conditions set forth in Section 10.4 hereof, Sections
5.1(e), 5.1(f) and 5.1(g) hereof shall not constitute Events of Default or
defaults hereunder.
SECTION 10.4. Conditions To Legal Or Covenant Defeasance. The
following shall be the conditions to the application of either Section 10.2 or
10.3 hereof to the Outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuer must irrevocably deposit, or cause to be deposited,
with the Trustee, in trust, for the benefit of the Holders of the
Securities, cash in U.S. dollars, U.S. Government Obligations, or a
combination thereof, in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public
accountants, to pay, without reinvestment, the principal of, premium, if
any, and interest on the Outstanding Securities on the stated maturity
thereof or on the applicable redemption date, as the case may be, and the
Issuer must specify whether the Securities are being defeased to maturity
or to a particular redemption date;
(b) in the case of Legal Defeasance, the Issuer must deliver to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Issuer has received from, or there has been published
by, the Internal Revenue Service a ruling, or there has been a change in
the applicable United States federal income tax law after the date of
this Indenture, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the Outstanding
Securities will not recognize income, gain or loss for United States
federal income tax purposes as a result of such Legal Defeasance, and
will be subject to United States federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Issuer must deliver to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the Outstanding Securities will not
recognize income, gain or loss for United States federal income tax
purposes as a result of such Covenant Defeasance, and such Holders will
be subject to United States federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(d) no default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under, any material
agreement or instrument (other than the Indenture) to which the Issuer or
any of its Restricted Subsidiaries is a party or by which the issuer or
any of its Restricted Subsidiaries is bound;
(f) the Issuer must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Issuer with the intent of
preferring the Holders of the Securities over other
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creditors of the Issuer, or with the intent of defeating, hindering,
delaying or defrauding creditors of the Issuer or others;
(g) the Issuer must deliver to the Trustee an Officers' Certificate
and an opinion of Counsel in the United States reasonably acceptable to
the Trustee, each stating that the conditions precedent provided for or
relating to Legal Defeasance or Covenant Defeasance, as applicable, in
the case of the Officer's Certificate, in clauses (a) through (f) and, in
the case of the opinion of Counsel, in clauses (b) and (c) of this
paragraph, have been complied with.
SECTION 10.5. Deposited Money And Government Securities To Be Held
In Trust; Other Miscellaneous Provisions. Subject to Section 10.6 hereof, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively, and
solely for purposes of this Section 10.5, the "Trustee") pursuant to Section
10.4 hereof in respect of the outstanding Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Issuer acting as Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
The Issuer shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable U.S.
Government Obligations deposited pursuant to Section 10.4 hereof or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
Outstanding Securities.
Anything in this Article Ten to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon the request
of the Issuer any money or non-callable U.S. Government Obligations held by it
as provided in Section 10.4 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 10.4(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 10.6. Repayment To Issuer. Any money deposited with the
Trustee or any Paying Agent, or then held by the Issuer, in trust for the
payment of the principal of, premium or interest on any Security and remaining
unclaimed for two years after such principal, and premium, if any, or interest
has become due and payable shall be paid to the Issuer on its request or (if
then held by the Issuer) shall be discharged from such trust; and the Holder
of such Security shall thereafter, as an unsecured creditor, look only to the
Issuer for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Issuer as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at
the expense of the Issuer cause to be published once, in the New York Times
and The Wall Street Journal (national edition), 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 notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer
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SECTION 10.7. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or non-callable U.S. Government Obligations in
accordance with Section 10.2 or 10.3 hereof, as the case may be, by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Issuer's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 10.2 or 10.3
hereof until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 10.2 or 10.3 hereof, as the case may
be; provided, however, that, if the Issuer makes any payment of principal of,
premium, if any, or interest on any Security following the reinstatement of
its obligations, the Issuer shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money held by the Trustee
or Paying Agent.
SECTION 10.8. Survival. The Trustee's rights under this Article Ten
shall survive termination of this Indenture.
SECTION 10.9. Satisfaction and Discharge of Indenture. If at any
time (a) the Issuer shall have paid or caused to be paid the principal of,
premium, if any, and interest, if any, on all the Securities Outstanding
(other than Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.9) as and when the same
shall have become due and payable, or (b) the Issuer shall have delivered to
the Trustee for cancellation all Securities theretofore authenticated (other
than Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.9); and if, in any such case, the
Issuer shall also pay or cause to be paid all other sums payable hereunder by
the Issuer (including all amounts, payable to the Trustee pursuant to Section
6.6), then this Indenture shall cease to be of further effect, and the
Trustee, on demand of the Issuer accompanied by an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent relating to
the satisfaction and discharge contemplated by this provision have been
complied with, and at the cost and expense of the Issuer, shall execute proper
instruments acknowledging such satisfaction and discharging this Indenture.
The Issuer agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred, and to compensate the Trustee for
any services thereafter reasonably and properly rendered, by the Trustee in
connection with this Indenture or the Securities.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1. Partners, Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability. No recourse under or
upon any obligation, covenant or agreement contained in this Indenture, or in
any Security, or because of any indebtedness evidenced thereby, shall be had
against any incorporator, as such or against any past, present or future
stockholder, officer or director, as such, of the Issuer, or any partner of
the Issuer or of any successor, either directly or through the Issuer or any
successor, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of the Securities by the Holders thereof and as part of the
consideration for the issue of the Securities.
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SECTION 11.2. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities. Nothing in this Indenture or in the
Securities, expressed or implied, shall give or be construed to give to any
Person, other than the parties hereto and their successors and the Holders of
the Securities, any legal or equitable right, remedy or claim under this
Indenture or under any covenant or provision herein contained, all such
covenants and provisions being for the sole benefit of the parties hereto and
their successors and of the Holders of the Securities.
SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Issuer shall bind its successors and assigns,
whether so expressed or not.
SECTION 11.4. Notices and Demands on Issuer, Trustee and Holders of
Securities. Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the Holders
of Securities to or on the Issuer, or as required pursuant to the Trust
Indenture Act of 1939, may be given or served by being deposited postage
prepaid, first-class mail (except as otherwise specifically provided herein)
addressed (until another address of the Issuer is filed by the Issuer with the
Trustee) to Hovnanian Enterprises, Inc., 10 Highway 35, P.O. Box 500, Red
Bank, New Jersey 07701. Any notice, direction, request or demand by the Issuer
or any Holder of Securities to or upon the Trustee shall be deemed to have
been sufficiently given or served by being deposited postage prepaid,
first-class mail (except as otherwise specifically provided herein) addressed
(until another address of the Trustee is filed by the Trustee with the Issuer)
to First Union National Bank, 21 South Street, Morristown, New Jersey 07960,
attention: Corporate Trust Administration (Hovnanian Enterprises Inc. [specify
series of Securities])].
Where this Indenture provides for notice to Holders of Securities,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder entitled thereto, at his last address as it appears in the Security
register. Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Issuer when such
notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be reasonably satisfactory to
the Trustee shall be deemed to be sufficient notice.
SECTION 11.5. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, or as required pursuant to the Trust Indenture Act of 1939, the
Issuer shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of
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this Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture (other
than a certificate provided pursuant to Section 4.3(d)) and delivered to the
Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition, (b) 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, (c) 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
opinion as to whether or not such covenant or condition has been complied
with, and (d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters, information with respect to which is
in the possession of the Issuer upon the certificate, statement or opinion of
or representations by an officer or officers of the Issuer unless such counsel
knows that the certificate, statement or opinion or representations with
respect to the matters upon which his certificate, statement or opinion may be
based as aforesaid are erroneous, or in the exercise of reasonable care should
know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.
SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays. If
the date of maturity of principal of or interest, if any, on the Securities of
any series or the date fixed for redemption, purchase or repayment of any such
Security shall not be a Business Day, then payment of interest, if any,
premium, if any, or principal need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made
on the date of maturity or the date fixed for redemption, purchase or
repayment, and, in the case of payment, no interest shall accrue for the
period after such date.
SECTION 11.7. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with
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another provision included in this Indenture which is required to be included
herein by any of Sections 310 to 317, inclusive, or is deemed applicable to
this Indenture by virtue of the provisions of the Trust Indenture Act of 1939,
such required provision shall control.
SECTION 11.8. GOVERNING LAW. THIS INDENTURE AND EACH SECURITY SHALL
BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 11.9. Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
SECTION 11.10. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1. Applicability of Article. The provisions of this
Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any sinking fund for the retirement of
Securities of a series except as otherwise specified, as contemplated by
Section 2.3 for Securities of such series.
SECTION 12.2. Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Securities of any series to be redeemed as a
whole or in part at the option of the Issuer shall be given by mailing notice
of such redemption by first class mail, postage prepaid, at least 30 days and
not more than 60 days prior to the date fixed for redemption to such Holders
of Securities of such series at their last addresses as they shall appear in
the Security register. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or
not the Holder receives the notice. Failure to give notice by mail, or any
defect in the notice to the Holder of any Security of a series designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security of such series.
The notice of redemption to each such Holder shall specify (i) the
principal amount of each Security of such series held by such Holder to be
redeemed, (ii) the date fixed for redemption, (iii) the redemption price, (iv)
the place or places of payment, (v) the CUSIP number relating to such
Securities, (vi) that payment will be made upon presentation and surrender of
such Securities, (vii) whether such redemption is pursuant to the mandatory or
optional sinking fund, or both, if such be the case, (viii) whether interest,
if any, (or, in the case of Original Issue Discount Securities, original issue
discount) accrued to the date fixed for redemption will be paid as specified
in such notice and (ix) whether on and after said date interest, if any, (or,
in the case of Original Issue Discount Securities, original issue discount)
thereon or on the portions thereof to be redeemed will cease to accrue. In
case any Security of a series is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
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redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Security, a new Security or Securities of such series in
principal amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be redeemed
at the option of the Issuer shall be given by the Issuer or, at the Issuer's
request, by the Trustee in the name and at the expense of the Issuer.
On or before the redemption date specified in the notice of
redemption given as provided in this Section 12.2, the Issuer will deposit
with the Trustee or with one or more paying agents (or, if the Issuer is
acting as its own paying agent, set aside, segregate and hold in trust as
provided in Section 3.5) an amount of money sufficient to redeem on the
redemption date all the Securities of such series so called for redemption at
the appropriate redemption price, together with accrued interest, if any, to
the date fixed for redemption. The Issuer will deliver to the Trustee at least
45 days prior to the date fixed for redemption (unless a shorter notice period
shall be satisfactory to the Trustee) an Officers' Certificate stating the
aggregate principal amount of Securities to be redeemed. In case of a
redemption at the election of the Issuer prior to the expiration of any
restriction on such redemption, the Issuer shall deliver to the Trustee, prior
to the giving of any notice of redemption to Holders pursuant to this Section,
an Officers' Certificate stating that such restriction has been complied with.
If less than all the Securities of a series are to be redeemed, the
Trustee, within 10 Business Days after the Issuer gives written notice to the
Trustee that such redemption is to occur, shall select, in such manner as it
shall deem appropriate and fair, Securities of such series to be redeemed.
Notice of the redemption shall be given only after such selection has been
made. Securities may be redeemed in part in multiples equal to the minimum
authorized denomination for Securities of such series or any multiple thereof.
The Trustee shall promptly notify the Issuer in writing of the Securities of
such series selected for redemption and, in the case of any Securities of such
series selected for partial redemption, the principal amount thereof to be
redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities of any
series shall relate, in the case of any Security redeemed or to be redeemed
only in part, to the portion of the principal amount of such Security which
has been or is to be redeemed.
SECTION 12.3. Payment of Securities Called for Redemption. If notice
of redemption has been given as provided by this Article Twelve, the
Securities or portions of Securities specified in such notice shall become due
and payable on the date and at the place or places stated in such notice at
the applicable redemption price, together with interest, if any accrued to the
date fixed for redemption, and on and after said date (unless the Issuer shall
default in the payment of such Securities at the redemption price, together
with interest, if any, accrued to said date) interest, if any (or, in the case
of Original Issue Discount Securities, original issue discount), on the
Securities or portions of Securities so called for redemption shall cease to
accrue, and such Securities shall cease from and after the date fixed for
redemption (unless an earlier date shall be specified in a Board Resolution,
Officers' Certificate or executed supplemental indenture referred to in
Sections 2.1 and 2.3 by or pursuant to which the form and terms of the
Securities of such series were established) except as provided in Sections 6.5
and 10.4, to be entitled to any benefit or security under this Indenture, and
the Holders thereof shall
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have no right in respect of such Securities except the right to receive the
redemption price thereof and unpaid interest, if any, to the date fixed for
redemption. On presentation and surrender of such Securities at a place of
payment specified in said notice, said Securities or the specified portions
thereof shall be paid and redeemed by the Issuer at the applicable redemption
price, together with interest, if any, accrued thereon to the date fixed for
redemption; provided that payment of interest, if any, becoming due on or
prior to the date fixed for redemption shall be payable to the Holders of
Securities registered as such on the relevant record date subject to the terms
and provisions of Sections 2.3 and 2.7 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the redemption price shall, until paid or
duly provided for, bear interest from the date fixed for redemption at the
rate of interest or Yield to Maturity (in the case of an Original Issue
Discount Security) borne by such Security.
Upon presentation of any Security redeemed in part only, the Issuer
shall execute and the Trustee shall authenticate and deliver to or on the
order of the Holder thereof, at the expense of the Issuer, a new Security or
Securities of such series, and of like tenor, of authorized denominations, in
principal amount equal to the unredeemed portion of the Security so presented.
SECTION 12.4. Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and
certificate number in an Officers' Certificate delivered to the Trustee at
least 45 days prior to the last date on which notice of redemption may be
given as being owned of record and beneficially by, and not pledged or
hypothecated by either (a) the Issuer, or (b) a Person specifically identified
in such written statement as an Affiliate of the Issuer.
SECTION 12.5. Mandatory and Optional Sinking Funds. The minimum
amount of any sinking fund payment provided for by the terms of the Securities
of any series is herein referred to as a "mandatory sinking fund payment," and
any payment in excess of such minimum amount provided for by the terms of the
Securities of any series is herein referred to as an "optional sinking fund
payment." The date on which a sinking fund payment is to be made is herein
referred to as the "sinking fund payment date."
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Securities in cash, the Issuer may at
its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise
acquired (except as aforesaid) by the Issuer and delivered to the Trustee for
cancellation pursuant to Section 2.10, (b) receive credit for optional sinking
fund payments (not previously so credited) made pursuant to this Section 12.5,
or (c) receive credit for Securities of such series (not previously so
credited) redeemed by the Issuer through any optional redemption provision
contained in the terms of such series. Securities so delivered or credited
shall be received or credited by the Trustee at the sinking fund redemption
price specified in such Securities.
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On or before the 60th day next preceding each sinking fund payment
date for any series, the Issuer will deliver to the Trustee an Officers'
Certificate (a) specifying the portion of the mandatory sinking fund payment
to be satisfied by payment of cash and the portion to be satisfied by credit
of Securities of such series and the basis for such credit, (b) stating that
none of the Securities of such series to be so credited has theretofore been
so credited, (c) stating that no defaults in the payment of interest or Events
of Default with respect to such series have occurred (which have not been
waived or cured or otherwise ceased to exist) and are continuing, and (d)
stating whether or not the Issuer intends to exercise its right to make an
optional sinking fund payment with respect to such series and, if so,
specifying the amount of such optional sinking fund payment which the Issuer
intends to pay on or before the next succeeding sinking fund payment date. Any
Securities of such series to be credited and required to be delivered to the
Trustee in order for the Issuer to be entitled to credit therefor as aforesaid
which have not theretofore been delivered to the Trustee shall be delivered
for cancellation pursuant to Section 2.10 to the Trustee with such Officers'
Certificate (or reasonably promptly thereafter if acceptable to the Trustee).
Such Officers' Certificate shall be irrevocable and upon its receipt by the
Trustee the Issuer shall become unconditionally obligated to make all the cash
payments or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Issuer, on or before any
such 60th day, to deliver such Officers' Certificate and Securities (subject
to the parenthetical clause in the second preceding sentence) specified in
this paragraph, if any, shall not constitute a default but shall constitute,
on and as of such date, the irrevocable election of the Issuer (i) that the
mandatory sinking fund payment for such series due on the next succeeding
sinking fund payment date shall be paid entirely in cash without the option to
deliver or credit Securities of such series in respect thereof, and (ii) that
the Issuer will make no optional sinking fund payment with respect to such
series as provided in this Section 12.5.
If the sinking fund payment or payments (mandatory or optional or
both) to be made in cash on the next succeeding sinking fund payment date plus
any unused balance of any preceding sinking fund payments made in cash shall
exceed $50,000, or a lesser sum if the Issuer shall so request with respect to
the Securities of any particular series, such cash shall be applied on the
next succeeding sinking fund payment date to the redemption of Securities of
such series at the sinking fund redemption price together with accrued
interest, if any, to the date fixed for redemption. If such amount shall be
$50,000 or less and the Issuer makes no such request, then it shall be carried
over until a sum in excess of $50,000 is available. The Trustee shall select,
in the manner provided in Section 12.2, for redemption on such sinking fund
payment date a sufficient principal amount of Securities of such series to
absorb said cash, as nearly as may be, and shall (if requested in writing by
the Issuer) inform the Issuer of the serial numbers of the Securities of such
series (or portions thereof) so selected. The Issuer, or the Trustee, in the
name and at the expense of the Issuer (if the Issuer shall so request the
Trustee in writing) shall cause notice of redemption of the Securities of such
series to be given in substantially the manner provided in Section 12.2 (and
with the effect provided in Section 12.3) for the redemption of Securities of
such series in part at the option of the Issuer. The amount of any sinking
fund payments not so applied or allocated to the redemption of Securities of
such series shall be added to the next cash sinking fund payment for such
series and, together with such payment, shall be applied in accordance with
the provisions of this Section 12.5. Any and all sinking fund moneys held on
the stated maturity date of the Securities of any particular series (or
earlier, if such maturity is accelerated), which are not held for the payment
or redemption of particular
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Securities of such series shall be applied, together with other moneys, if
necessary, sufficient for the purpose, to the payment of the principal of, and
interest, if any, on, the Securities of such series at maturity.
On or before each sinking fund payment date, the Issuer shall pay to
the Trustee in cash or shall otherwise provide for the payment of all
interest, if any, accrued to the date fixed for redemption on Securities to be
redeemed on such sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities
of a series with sinking fund moneys or give any notice of redemption of
Securities for such series by operation of the sinking fund during the
continuance of a default in payment of interest on such Securities or of any
Event of Default with respect to such series except that, where the giving of
notice of redemption of any Securities shall theretofore have been made, the
Trustee shall redeem or cause to be redeemed such Securities, provided that it
shall have received from the Issuer a sum sufficient for such redemption.
Except as aforesaid, any moneys in the sinking fund for such series at the
time when any such default or Event of Default known to a Responsible Officer
of the Trustee shall occur, and any moneys thereafter paid into the sinking
fund, shall, during the continuance of such default or Event of Default, be
deemed to have been collected under Article Five and held for the payment of
all such Securities. In case such Event of Default shall have been waived as
provided in Section 5.7 or the default cured on or before the 60th day
preceding the sinking fund payment date in any year, such moneys shall
thereafter be applied on the next succeeding sinking fund payment date in
accordance with this Section to the redemption of such Securities.
ARTICLE THIRTEEN
GUARANTEES
SECTION 13.1. Applicability of Article. The provisions of this
Article shall be applicable to each of the Guarantors specified pursuant to
Section 2.3 for the Guarantee of Securities of a series.
SECTION 13.2. Guarantee. Each Guarantor of a particular series of
Securities hereby unconditionally guarantees (each such guarantee to be
referred to herein as a "Guarantee"), jointly and severally with each other
Guarantor of the Securities of that series, if any, to each Holder of such
Securities authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
this Indenture, such Securities or the obligations of the Company hereunder or
thereunder, (i) the due and punctual payment of the principal of and any
premium or interest on such Securities, whether at maturity or on an interest
payment date, by acceleration, pursuant to an offer to purchase such
Securities or otherwise, and interest on the overdue principal of and
interest, if any, on such Securities, if lawful, and all other obligations of
the Company to the Holders of such Securities or the Trustee hereunder or
thereunder shall be promptly paid in full, all in accordance with the terms
hereof and thereof including all amounts payable to the Trustee under Section
6.6 hereof, and (ii) in case of any extension of time of payment or renewal of
any such Securities or any of such other obligations, the same shall be
promptly paid in full when due or to be performed in accordance
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with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise.
If the Company fails to make any payment when due of any amount so
guaranteed for whatever reason, the Guarantor of the Securities of that series
shall be obligated, jointly and severally with each other Guarantor, if any,
to pay the same immediately. Each Guarantor hereby agrees that its obligations
hereunder shall be continuing, absolute and unconditional, irrespective of,
and shall be unaffected by, the validity, regularity or enforceability of the
Securities, this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Securities or the Trustee with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of such
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, demand of performance, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding
first against the Company, the benefit of discussion, protest, notice and all
demand whatsoever and covenants that its Guarantee shall not be discharged
except by complete performance of the obligations contained in the Securities
guaranteed by such Guarantee, in this Indenture and in this Article 13. If any
Holder of Securities of a series guaranteed hereby or the Trustee is required
by any court or otherwise to return to the Company or any Guarantor of such
Securities, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor, any amount paid by the
Company or any Guarantor of such Securities to the Trustee or such Holder,
this Article 13, to the extent theretofore discharged with respect to any
Guarantee of such Securities, shall be reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Securities of a series guaranteed
hereby by such Guarantor in respect of any obligations guaranteed hereby by
such Guarantee until payment in full of all such obligations. Each Guarantor
further agrees that, as between such Guarantor, on the one hand, and the
Holders of Securities of a series guaranteed hereby by such Guarantor and the
Trustee on the other hand, (i) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article 5 hereof for the purposes of
such Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby
and (ii) in the event of any acceleration of such obligations as provided in
Article 5 hereof such obligations (whether or not due and payable) shall
forthwith become due and payable by such Guarantor, jointly severally with any
other Guarantor of such Securities, for the purpose of this Article 13. In
addition, without limiting the foregoing, upon the effectiveness of an
acceleration under Article 5, the Trustee may make a demand for payment on the
Securities under any Guarantee provided hereunder and not discharged.
With respect to each Guarantee by a Guarantor, such Guarantor shall
be subrogated to all rights of the Holder of any Securities guaranteed hereby
by such Guarantee against the Company in respect of any amounts paid to such
Holder by such Guarantor pursuant to the provisions of such Guarantee;
provided that the 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 and interest on all such Securities shall have been paid in full.
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The Guarantee set forth in this Section 13.1 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by the
Trustee or any duly appointed agent.
The Guarantees provided in this Section 13.1 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by the
Trustee or any duly appointed agent.
SECTION 13.3. Obligations of the Guarantor Unconditional. Nothing
contained in this Article 13 or elsewhere in this Indenture or in any Security
is intended to or shall impair, as between a Guarantor and the Holders of the
Securities guaranteed by such Guarantor's Guarantee, the obligations of such
Guarantor, which are absolute and unconditional, to pay to such Holders the
principal of and interest on the Securities as and when the same shall become
due and payable in accordance with the provisions of this Guarantee or is
intended to or shall affect the relative rights of such Holders and creditors
of such Guarantor, nor shall anything herein or therein prevent the Trustee or
such Holder from exercising all remedies otherwise permitted by applicable law
upon Default under this Indenture in respect of cash, property or securities
of such Guarantor received upon the exercise of any such remedy;
Upon any distribution of assets of a Guarantor referred to in this
Article 13, the Trustee, subject to the provisions of Sections 6.1 and 6.2,
and the Holders of the Securities guaranteed hereby by such Guarantor shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the Trustee or to
such Holders, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of other indebtedness of such
Guarantor, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this
Article 13.
SECTION 13.4. Article 13 Not To Prevent Events of Default. The
failure to make a payment on account of principal or interest on the
Securities of any series by reason of any provision in this Article 13 shall
not be construed as preventing the occurrence of an Event of Default under
Section 5.1.
SECTION 13.5. Execution and Delivery of Guarantee. To evidence a
Guarantee set forth in this Article 13, the Guarantor hereby agrees that the
Guarantee Notation, substantially in the form of Exhibit A hereto, shall be
endorsed on each Security authenticated and delivered by the Trustee that is
guaranteed by such Guarantee and that this Indenture shall be executed on
behalf of such Guarantor by its Chairman of the Board, its President or one of
its Vice Presidents under a facsimile of its seal reproduced thereon.
Each Guarantor hereby agrees that its Guarantee shall remain in full
force and effect notwithstanding any failure to endorse the Guarantee Notation
on each such Security.
If an officer whose signature is on this Indenture or on the
Securities guaranteed hereby no longer holds that office at the time the
Trustee authenticates the Security on which a notation of the Guarantee is
endorsed, such Guarantee shall be valid nevertheless.
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The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of each Guarantee thereof.
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This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first written above.
HOVNANIAN ENTERPRISES, INC.
By ____________________________
[title]
[CORPORATE SEAL]
Attest:
________________________________
Secretary
[CORPORATE SEAL]
FIRST UNION NATIONAL BANK, AS TRUSTEE
By ______________________________
[title]
Attest:
________________________________
Trust Officer
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EXHIBIT A
[FORM OF NOTATION OF SECURITY
RELATING TO GUARANTEE]
GUARANTEE
[Name of Guarantor] (hereinafter referred to as the "Guarantor",
which term includes any successor person under the Indenture (the "Indenture")
referred to in the Security upon which this notation is endorsed) (the
"Endorsed Security"), has unconditionally guaranteed (i) the due and punctual
payment of the principal of, premium, if any, and interest on the Endorsed
Security and all other Securities of the same series as the Endorsed Security
(the "Guaranteed Securities"), whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal
of, premium, if any, and interest, if any, on the Guaranteed Securities, to
the extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders of Guaranteed Securities or the
Trustee all in accordance with the terms set forth in Article 13 of the
Indenture and (ii) in case of any extension of time of payment or renewal of
any Guaranteed Securities or any of such other obligations, that the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture.
The obligations of the Guarantor to the Holders of Guaranteed
Securities and to the Trustee pursuant to the Guarantee evidenced hereby and
the Indenture are expressly set forth in Article 13 of the Indenture and
reference is hereby made to such Indenture for the terms of such Guarantee.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any personal liability under
the Guarantee evidenced hereby by reason of his or its status as such
stockholder, officer, director or incorporator.
The Guarantee evidenced hereby shall not be valid or obligatory for
any purpose until the certificate of authentication of the Guaranteed
Securities shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
Guarantor
[SEAL]
[NAME OF GUARANTOR]
By_____________________
By_____________________
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EXHIBIT B
[SUBSIDIARY GUARANTORS]
-64-
EXHIBIT 4.4
===============================================================================
HOVNANIAN ENTERPRISES, INC.
Issuer
and
SUBSIDIARY GUARANTORS OF HOVNANIAN
Guarantors
and
FIRST UNION NATIONAL BANK,
as Trustee
----------------------------
INDENTURE
Dated as of ___________ ___, 2001
FORM OF SENIOR SUBORDINATED INDENTURE
===============================================================================
CROSS REFERENCE SHEET*
---------------
Provisions of Trust Indenture Act of 1939 and Indenture to be dated
as of _____ among HOVNANIAN ENTERPRISES, INC., SUBSIDIARY GUARANTORS OF
HOVNANIAN and FIRST UNION NATIONAL BANK, as Trustee:
Section of the Act Section of Indenture
- ------------------ --------------------
310(a)(1), (2) and (5)........... 6.9
310(a)(3) and (4)................ Inapplicable
310(b)........................... 6.8 and 6.10(a), (b) and (d)
310(c)........................... Inapplicable
311(a)........................... 6.13
311(b)........................... 6.13
311(c)........................... Inapplicable
312(a)........................... 4.1 and 4.2(a)
312(b)........................... 4.2(a) and (b)(i) and (ii)
312(c)........................... 4.2(c)
313(a)........................... 4.4(a)(i), (ii), (iii), (iv), (v), (vi) and
(vii)
313(a)(5)........................ Inapplicable
313(b)(1)........................ Inapplicable
313(b)(2)........................ 4.4(b)
313(c)........................... 4.4(c)
313(d)........................... 4.4(d)
314(a)........................... 4.3
314(b)........................... Inapplicable
314(c)(1) and (2)................ 11.5
314(c)(3)........................ Inapplicable
314(d)........................... Inapplicable
314(e)........................... 11.5
314(f)........................... Inapplicable
315(a), (c) and (d).............. 6.1
315(b)........................... 5.8
315(e)........................... 5.9
316(a)(1)........................ 5.7
316(a)(2)........................ Not required
316(a)(last sentence)............ 7.4
316(b)........................... 5.4
317(a)........................... 5.2
317(b)........................... 3.5(a)
318(a)........................... 11.7
_______________
* This Cross Reference Sheet is not part of the Indenture.
Table of Contents
Page
ARTICLE ONE
DEFINITIONS
"Affiliate"..................................................................2
"Authenticating Agent".......................................................2
"Bankruptcy Code"............................................................2
"Board of Directors".........................................................2
"Board Resolution"...........................................................2
"Business Day"...............................................................2
"Commission".................................................................2
"Consolidated Net Tangible Assets"...........................................2
"Corporate Trust Office".....................................................3
"Covenant Defeasance"........................................................3
"Depositary".................................................................3
"Dollars"....................................................................3
"Eligible Guarantors"........................................................3
"Exchange Act"...............................................................3
"Event of Default"...........................................................3
"Global Security"............................................................3
"Guarantee"..................................................................3
"Guarantor"..................................................................3
"Holder", "Holder of Securities", "Securityholder"...........................3
"Hovnanian"..................................................................3
"Indebtedness"...............................................................3
"Indenture"..................................................................4
"interest"...................................................................4
"Issuer" ....................................................................4
"Issuer Order"...............................................................4
"Legal Defeasure"............................................................4
"Officers' Certificate"......................................................4
"Opinion of Counsel".........................................................4
"original issue date"........................................................4
"original issue discount"....................................................5
"Original Issue Discount Security"...........................................5
"Outstanding"................................................................5
"Periodic Offering"..........................................................5
"Person" ....................................................................5
"Place of Payment"...........................................................6
"principal"..................................................................6
"principal amount"...........................................................6
"record date"................................................................6
"Responsible Officer"........................................................6
"Restricted Subsidiary"......................................................6
"Securities Act".............................................................6
"Security" or "Securities"...................................................6
"Senior Indebtedness"........................................................6
"Senior Subordinated Indebtedness"...........................................6
"Subordinated Indebtedness"..................................................7
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"Significant Subsidiary".....................................................7
"Subsidiary".................................................................7
"Trust Indenture Act of 1939"................................................7
"Trustee"....................................................................7
"Unrestricted Subsidiary"....................................................7
"U.S. Government Obligations"................................................7
"vice president".............................................................7
"Yield to Maturity"..........................................................7
ARTICLE TWO
SECURITIES
SECTION 2.1. Forms Generally.................................................8
SECTION 2.2. Form of Trustee's Certificate of Authentication.................8
SECTION 2.3. Amount Unlimited Issuable in Series.............................9
SECTION 2.4. Authentication and Delivery of Securities......................11
SECTION 2.5. Execution of Securities........................................13
SECTION 2.6. Certificate of Authentication..................................14
SECTION 2.7. Denomination and Date of Securities; Payments of Interest......14
SECTION 2.8. Registration, Transfer and Exchange............................14
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen Securities......16
SECTION 2.10. Cancellation of Securities; Disposition Thereof...............17
SECTION 2.11. Temporary Securities..........................................17
SECTION 2.12. CUSIP Numbers.................................................18
ARTICLE THREE
COVENANTS
SECTION 3.1. Payment of Principal and Interest..............................18
SECTION 3.2. Offices for Notices and Payments, etc..........................18
SECTION 3.3. No Interest Extension..........................................18
SECTION 3.4. Appointments to Fill Vacancies in Trustee's Office.............18
SECTION 3.5. Provision as to Paying Agent...................................18
ARTICLE FOUR
SECURITYHOLDERS LISTS AND
REPORTS BY THE ISSUER AND THE TRUSTEE
SECTION 4.1. Issuer to Furnish Trustee Information as to Names
and Addresses of Securityholders..............................19
SECTION 4.2. Preservation and Disclosure of Securityholders Lists...........19
SECTION 4.3. Reports by the Issuer..........................................20
SECTION 4.4. Reports by the Trustee.........................................21
ARTICLE FIVE
REMEDIES OF THE TRUSTEE
AND SECURITY HOLDERS ON EVENT OF DEFAULT
SECTION 5.1. Events of Default..............................................21
SECTION 5.2. Payment of Securities on Default; Suit Therefor................24
SECTION 5.3. Application of Moneys Collected by Trustee.....................25
SECTION 5.4. Proceedings by Securityholders.................................25
SECTION 5.5. Proceedings by Trustee.........................................26
SECTION 5.6. Remedies Cumulative and Continuing.............................26
SECTION 5.7. Direction of Proceedings; Waiver of Defaults by
Majority of Securityholders...................................26
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SECTION 5.8. Notice of Defaults.............................................27
SECTION 5.9. Undertaking to Pay Costs.......................................27
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1. Duties and Responsibilities of the Trustee; During
Default; Prior to Default....................................27
SECTION 6.2. Certain Rights of the Trustee..................................28
SECTION 6.3. Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds Thereof.............29
SECTION 6.4. Trustee and Agents May Hold Securities;
Collections, etc.............................................29
SECTION 6.5. Moneys Held by Trustee.........................................30
SECTION 6.6. Compensation and Indemnification of Trustee and
Its Prior Claim..............................................30
SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc.........30
SECTION 6.8. Qualification of Trustee; Conflicting Interests................30
SECTION 6.9. Persons Eligible for Appointment as Trustee; Different
Trustees for Different Series................................30
SECTION 6.10. Resignation and Removal; Appointment of Successor
Trustee.....................................................31
SECTION 6.11. Acceptance of Appointment by Successor Trustee................32
SECTION 6.12. Merger, Conversion, Consolidation or Succession
to Business of Trustee......................................33
SECTION 6.13. Preferential Collection of Claims Against the Issuer..........33
SECTION 6.14. Appointment of Authenticating Agent...........................33
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1. Evidence of Action Taken by Securityholders....................34
SECTION 7.2. Proof of Execution of Instruments and of
Holding of Securities........................................34
SECTION 7.3. Holders to be Treated as Owners................................35
SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding..............35
SECTION 7.5. Right of Revocation of Action Taken............................35
SECTION 7.6. Record Date for Consents and Waivers...........................36
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of
Securityholders..............................................36
SECTION 8.2. Supplemental Indentures with Consent of Securityholders........37
SECTION 8.3. Effect of Supplemental Indenture...............................39
SECTION 8.4. Documents to Be Given to Trustee...............................39
SECTION 8.5. Notation on Securities in Respect of Supplemental Indentures...39
ARTICLE NINE
CONSOLIDATION, MERGER,
SALE, LEASE, EXCHANGE OR OTHER DISPOSITION
SECTION 9.1. Consolidation Permitted, etc., on Certain Terms................39
SECTION 9.2. Successor Corporation to be Substituted........................40
SECTION 9.3. Opinion of Counsel to be Given Trustee.........................40
ARTICLE TEN
LEGAL DEFEASANCE
AND COVENANT DEFEASANCE
SECTION 10.1. Applicability of Article......................................40
SECTION 10.2. Legal Defeasance And Discharge................................40
SECTION 10.3. Covenant Defeasance...........................................41
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SECTION 10.4. Conditions To Legal Or Covenant Defeasance....................41
SECTION 10.5. Deposited Money And Government Securities To Be
Held In Trust; Other Miscellaneous Provisions...............42
SECTION 10.6. Repayment To Issuer...........................................43
SECTION 10.7. Reinstatement.................................................43
SECTION 10.8. Survival......................................................43
SECTION 10.9. Satisfaction and Discharge of Indenture.......................43
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1. Partners, Incorporators, Stockholders, Officers
and Directors of Issuer Exempt from Individual
Liability...................................................43
SECTION 11.2. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities...........................44
SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture...........44
SECTION 11.4. Notices and Demands on Issuer, Trustee and Holders
of Securities...............................................44
SECTION 11.5. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein..........................44
SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays...............45
SECTION 11.7. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939.......................................45
SECTION 11.8. GOVERNING LAW.................................................45
SECTION 11.9. Counterparts..................................................46
SECTION 11.10. Effect of Headings...........................................46
ARTICLE TWELVE
REDEMPTION OF
SECURITIES AND SINKING FUNDS
SECTION 12.1. Applicability of Article......................................46
SECTION 12.2. Notice of Redemption; Partial Redemptions.....................46
SECTION 12.3. Payment of Securities Called for Redemption...................47
SECTION 12.4. Exclusion of Certain Securities from Eligibility
for Selection for Redemption................................48
SECTION 12.5. Mandatory and Optional Sinking Funds..........................48
ARTICLE THIRTEEN
SUBORDINATION
SECTION 13.1. Securities Subordinated to Senior Indebtedness................49
SECTION 13.2. Reliance on Certificate of Liquidating Agent;
Further Evidence as to Ownership of Senior
Indebtedness................................................52
SECTION 13.3. Payment Permitted If No Default...............................52
SECTION 13.4. Disputes with Holders of Certain Senior Indebtedness..........53
SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition.............53
SECTION 13.6. Trustee to Effectuate Subordination...........................53
SECTION 13.7. Rights of Trustee as Holder of Senior Indebtedness............53
SECTION 13.8. Article Applicable to Paying Agents...........................53
SECTION 13.9. Subordination Rights Not Impaired by Acts or
Omissions of the Issuer or Holders of Senior
Indebtedness................................................54
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior
Indebtedness...............................................54
ARTICLE FOURTEEN
SUBORDINATED GUARANTEE
SECTION 14.1. Applicability of Article.....................................54
SECTION 14.2. Guarantee....................................................54
SECTION 14.3. Guarantee Subordinated to Senior Debt of the
Guarantor..................................................55
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SECTION 14.4. Guarantors Not to Make Payments With Respect to
Securities in Certain Circumstances........................57
SECTION 14.5. Guarantee Subordinated to Prior Payment of All
Senior Debt of each Guarantor on Dissolution,
Winding Up, Liquidation or Reorganization of a
Guarantor..................................................58
SECTION 14.6. Holders to be Subrogated to Rights of Holders of
Senior Debt of each Guarantor..............................60
SECTION 14.7. Obligations of each Guarantor Unconditional..................60
SECTION 14.8. Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice........................................60
SECTION 14.9. Application by Trustee of Monies Deposited with It...........61
SECTION 14.10. Subordination Rights Not Impaired by Acts or
Omissions of a Guarantor or Holders of
Senior Debt of such Guarantor..............................61
SECTION 14.11. Holders Authorize Trustee to Effectuate
Subordination of Securities................................61
SECTION 14.12. Right of Trustee to Hold Senior Debt of a Guarantor..........62
SECTION 14.13. Trustee Not Fiduciary for Holders of Senior
Debt of a Guarantor........................................62
SECTION 14.14. Article 14 Not To Prevent Events of Default..................62
SECTION 14.15. Execution and Delivery of Guarantee..........................62
SECTION 14.16. Subordination of Indebtedness Owed by the
Company to a Guarantor.....................................62
SECTION 14.17. Officers' Certificate........................................63
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FORM OF SENIOR SUBORDINATED INDENTURE
FORM OF SENIOR SUBORDINATED INDENTURE, dated as of ____ ___, 2001
among Hovnanian Enterprises, Inc., a Delaware corporation (the "Issuer" or
"Hovnanian"), Subsidiary Guarantors of Hovnanian and FIRST UNION NATIONAL
BANK, as trustee (the "Trustee").
RECITALS OF THE ISSUER:
-----------------------
WHEREAS, the Issuer has duly authorized the issuance from time to
time of its unsecured debentures, notes or other evidences of indebtedness to
be issued in one or more series (the "Securities") up to such principal amount
or amounts as may from time to time be authorized in accordance with the terms
of this Indenture; and
WHEREAS, the Issuer has duly authorized the execution and delivery
of this Indenture to provide, among other things, for the authentication,
delivery and administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been undertaken and
completed.
RECITALS OF GUARANTORS:
-----------------------
WHEREAS, each Guarantor desires to make the Guarantees provided for
herein; and
WHEREAS, all things necessary to make this Indenture a valid
agreement of each of the Guarantors, in accordance with its terms, have been
done and the Guarantor will do all things necessary to make the Guarantees,
when executed by each of the Guarantors and endorsed on the Securities
authenticated and delivered hereunder, the valid obligations of each Guarantor
as hereinafter provided.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows:
ARTICLE ONE
DEFINITIONS
For all purposes of this Indenture and of any indenture supplemental
hereto the following terms shall have the respective meanings specified in
this Section 1.1 (except as otherwise expressly provided herein or in any
indenture supplemental hereto or unless the context otherwise clearly
requires). All other terms used in this Indenture that are defined in the
Trust Indenture Act of 1939, including terms defined therein by reference to
the Securities Act of 1933, as amended (the "Securities Act"), shall have the
meanings assigned to such terms in said Trust Indenture Act of 1939 and in the
Securities Act as in force at the date of this Indenture (except as otherwise
expressly provided herein or in any indenture supplemental hereto or unless
the context otherwise clearly requires).
All accounting terms used herein and not expressly defined shall
have the meanings assigned to such terms in accordance with generally accepted
accounting principles, and the term "generally accepted accounting principles"
means such accounting principles as are generally accepted on the date of this
Indenture.
The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. The expressions "date of this
Indenture", "date hereof", "date as of which this Indenture is dated" and
"date of execution and delivery of this Indenture" and other expressions of
similar import refer to the effective date of the original execution and
delivery of this Indenture, viz. as of _____________________.
The terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" shall have the meaning set forth in Section
6.14.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 United
States Codess.ss.101 et seq., or any successor statute thereto.
"Board of Directors" means the board of directors of the Issuer or
any duly authorized committee of that board or any director or directors
and/or officer or officers to whom that board or committee shall have duly
delegated its authority.
"Board Resolution" means (1) one or more resolutions, certified by
the secretary or an assistant secretary of the Issuer to have been duly
adopted or consented to by the Board of Directors of the Issuer and to be in
full force and effect, or (2) a certificate signed by the director or
directors and/or officer or officers to whom the Board of Directors or any
duly authorized committee of that Board shall have duly delegated its
authority, in each case delivered to the Trustee for the Securities of any
series.
"Business Day" means, with respect to any Security, unless otherwise
specified in a Board Resolution and an Officers Certificate with respect to a
particular series of Securities, a day that (a) in the Place of Payment (or in
any of the Places of Payment, if more than one) in which amounts are payable,
as specified in the form of such Security, and (b) in the city in which the
Corporate Trust Office is located, is not a day on which banking institutions
are authorized or required by law or regulation to close.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
as amended, or, if at any time after the execution and delivery of this
Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act of 1939, then the body performing
such duties on such date.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets included on the most recent consolidated balance sheet of the Issuer
and its Restricted Subsidiaries, less applicable reserves and other properly
deductible items and after deducting therefrom (a) all current liabilities and
(b) all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles, all in accordance with generally
accepted accounting principles consistently applied.
-2-
"Corporate Trust Office" means the office of the Trustee of a series
of Securities at which the trust created by this Indenture shall, at any
particular time, be principally administered, which office is, at the date as
of which this Indenture is dated, located at [address].
"Covenant Defeasance" has the meaning set forth in Section 10.3.
"Depositary" means, with respect to the Securities of any series
issuable or issued in the form of one or more Global Securities, the Person
designated as Depositary by the Issuer pursuant to Section 2.3 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or
include each Person who is then a Depositary hereunder, and, if at any time
there is more than one such Person, "Depositary" as used with respect to the
Securities of any such series shall mean the Depositary with respect to the
Global Securities of such series.
"Dollars" and the sign "$" means the coin and currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
"Eligible Guarantors" means each of the entities listed on Exhibit B
hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Event of Default" means any event or condition specified as such in
Section 5.1.
"Global Security" means a Security evidencing all or a part of a
series of Securities issued to the Depositary for such series in accordance
with Section 2.3 and bearing the legend prescribed in Section 2.4.
"Guarantee" has the meaning specified in Section 14.2.
"Guarantor" has the meaning specified in Section 2.3.
"Holder", "Holder of Securities", "Securityholder" or other similar
terms mean, in the case of any Security, the Person in whose name such
Security is registered in the security register kept by the Issuer for that
purpose in accordance with the terms hereof.
"Hovnanian" means Hovnanian Enterprises, Inc., a Delaware
corporation.
"Indebtedness" with respect to any Person, means, without
duplication:
(a) (i) the principal of and premium, if any, and interest, if any,
on indebtedness for money borrowed of such Person, indebtedness of such
Person evidenced by bonds, notes, debentures or similar obligations, and
any guaranty by such Person of any indebtedness for money borrowed or
indebtedness evidenced by bonds, notes, debentures or similar obligations
of any other Person, whether any such indebtedness or guaranty is
outstanding on the date of this Indenture or is thereafter created,
assumed or incurred, (ii) obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's acceptance
or similar credit transaction; (iii) the principal of and premium, if
any, and interest, if any, on indebtedness incurred, assumed or
guaranteed by such Person in connection with the acquisition by it or any
of its subsidiaries of any other businesses, properties or other assets;
(iv) lease obligations which such Person capitalizes in accordance with
Statement of Financial Accounting Standards No. 13 promulgated by the
-3-
Financial Accounting Standards Board or such other generally accepted
accounting principles as may be from time to time in effect; (v) any
indebtedness of such Person representing the balance deferred and unpaid
of the purchase price of any property or interest therein (except any
such balance that constitutes an accrued expense or trade payable) and
any guaranty, endorsement or other contingent obligation of such Person
in respect of any indebtedness of another that is outstanding on the date
of this Indenture or is thereafter created, assumed or incurred by such
Person; and (vi) obligations of such Person under interest rate,
commodity or currency swaps, caps, collars, options and similar
arrangements; and
(b) any amendments, modifications, refundings, renewals or
extensions of any indebtedness or obligation described as Indebtedness in
clause (a) above.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, including, for all purposes of this instrument and any
such supplement, the provisions of the Trust Indenture Act of 1939 that are
deemed to be a part of and govern this instrument and any such supplement,
respectively, and shall include the forms and terms of particular series of
Securities established as contemplated hereunder.
"interest" means, when used with respect to non-interest bearing
Securities (including, without limitation, any Original Issue Discount
Security that by its terms bears interest only after maturity or upon default
in any other payment due on such Security), interest payable after maturity
(whether at stated maturity, upon acceleration or redemption or otherwise) or
after the date, if any, on which the Issuer becomes obligated to acquire a
Security, whether upon conversion, by purchase or otherwise.
"Issuer" means Hovnanian Enterprises, Inc., a Delaware corporation,
and, subject to Article Nine, its successors and assigns.
"Issuer Order" means a written statement, request or order of the
Issuer which is signed in its name by the chairman of the Board of Directors,
the president or any vice president of the Issuer, and delivered to the
Trustee.
"Legal Defeasure", has the meaning specified in Section 10.2.
"Officers' Certificate"means a certificate signed by the chairman of
the Board of Directors, the president, or any vice president and by the
treasurer, any assistant treasurer, the controller, any assistant controller,
the secretary or any assistant secretary of the Issuer. Each such certificate
shall include the statements provided for in Section 11.5 if and to the extent
required by the provisions of such Section 11.5. One of the officers signing
an Officers' Certificate given pursuant to Section 4.3 shall be the principal
executive, financial or accounting officer of the Issuer.
"Opinion of Counsel" means an opinion in writing signed by the chief
counsel of the Issuer or by such other legal counsel who may be an employee of
or counsel to the Issuer and who shall be reasonably satisfactory to the
Trustee. Each such opinion shall include the statements provided for in
Section 11.5, if and to the extent required by the provisions of such Section
11.5.
"original issue date" of any Security (or portion thereof) means the
earlier of (a) the date of such Security or (b) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly)
on registration of transfer, exchange or substitution.
-4-
"original issue discount" of any debt security, including any
Original Issue Discount Security, means the difference between the principal
amount of such debt security and the initial issue price of such debt security
(as set forth in the case of an Original Issue Discount Security on the face
of such Security).
"Original Issue Discount Security" means any Security that provides
for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the maturity thereof pursuant to Article
Five.
"Outstanding" when used with reference to Securities, shall, subject
to the provisions of Section 7.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities (other than Securities of any series as to which the
provisions of Article Ten hereof shall not be applicable), or portions
thereof, for the payment or redemption of which moneys or U.S. Government
Obligations (as provided for in Section 10.1) in the necessary amount
shall have been deposited in trust with the Trustee or with any paying
agent (other than the Issuer) or shall have been set aside, segregated
and held in trust by the Issuer for the Holders of such Securities (if
the Issuer shall act as its own paying agent), provided that, if such
Securities, or portions thereof, are to be redeemed prior to the maturity
thereof, notice of such redemption shall have been given as herein
provided, or provision satisfactory to the Trustee shall have been made
for giving such notice; and
(c) Securities which shall have been paid or in substitution for
which other Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.9 (except with respect to any such
Security as to which proof satisfactory to the Trustee is presented that
such Security is held by a Person in whose hands such Security is a
legal, valid and binding obligation of the Issuer).
In determining whether the Holders of the requisite aggregate
principal amount of Outstanding Securities of any or all series have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding for such purposes shall be the portion of
the principal amount thereof that would be due and payable as of the date of
such determination (as certified by the Issuer to the Trustee) upon a
declaration of acceleration of the maturity thereof pursuant to Article Five.
"Periodic Offering" means an offering of Securities of a series from
time to time, the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the stated
maturity or maturities thereof and the redemption provisions, if any, with
respect thereto, are to be determined by the Issuer or its agents upon the
issuance of such Securities.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
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"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and interest, if any,
on the Securities of such series are payable as determined in accordance with
Section 2.3.
"principal" of a debt security, including any Security, means the
amount (including, without limitation, if and to the extent applicable, any
premium and, in the case of an Original Issue Discount Security, any accrued
original issue discount, but excluding interest) that is payable with respect
to such debt security as of any date and for any purpose (including, without
limitation, in connection with any sinking fund, if any, upon any redemption
at the option of the Issuer, upon any purchase or exchange at the option of
the Issuer or the holder of such debt security and upon any acceleration of
the maturity of such debt security).
"principal amount" of a debt security, including any Security, means
the principal amount as set forth on the face of such debt security.
"record date" shall have the meaning set forth in Section 2.7.
"Responsible Officer", when used with respect to the Trustee of a
series of Securities, means any officer of the Trustee with direct
responsibility for the administration of the trust created by this Indenture.
"Restricted Subsidiary" means (a) any Subsidiary of the Issuer other
than an Unrestricted Subsidiary, and (b) any Subsidiary of the Issuer which
was an Unrestricted Subsidiary but which, subsequent to the date hereof, is
designated by the Issuer (by Board Resolution) to be a Restricted Subsidiary;
provided, however, that the Issuer may not designate any such Subsidiary to be
a Restricted Subsidiary if the Issuer would thereby breach any covenant or
agreement herein contained (on the assumptions that any outstanding
Indebtedness of such Subsidiary was incurred at the time of such designation).
"Securities Act" shall have the meaning set forth in Section 1.1.
"Security" or "Securities" has the meaning stated in the first
recital of this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture; provided, however that if at
any time there is more than one Person acting as Trustee under this
Instrument, "Securities" with respect to the Indenture as to which such Person
is Trustee shall have the meaning stated in the first recital of this
instrument and shall more particularly mean Securities authenticated and
delivered under this instrument, exclusive, however, of Securities of any
series as to which such Person is not Trustee.
"Senior Indebtedness" means Indebtedness of the Issuer outstanding
at any time (other than the Indebtedness evidenced by the Securities of any
series) except (a) any Indebtedness as to which, by the terms of the
instrument creating or evidencing such Indebtedness, it is provided that such
Indebtedness is not senior or prior in right of payment to the Securities or
is pari passu or subordinate by its terms in right of payment to the
Securities, (b) renewals, extensions and modifications of any such
Indebtedness, (c) any Indebtedness of the Issuer to a wholly-owned Subsidiary
of the Issuer, (d) interest accruing after the filing of a petition initiating
any proceeding referred to in Sections 5.1(e) and 5.1(f) unless such interest
is an allowed claim enforceable against the Issuer in a proceeding under
federal or state bankruptcy laws and (e) trade payables.
"Senior Subordinated Indebtedness" means the Securities and any
other Indebtedness of the Issuer that ranks pari passu with the Securities.
Any Indebtedness of the Issuer that is subordinate or
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junior by its terms in right of payment to any other Indebtedness of the
Issuer shall be subordinate to Senior Subordinated Indebtedness unless the
instrument creating or evidencing the same or pursuant to which the same is
outstanding specifically provides that such Indebtedness (i) is to rank pari
passu with other Senior Subordinated Indebtedness and (ii) is not subordinated
by its terms to any Indebtedness of the Issuer which is not Senior
Indebtedness.
"Subordinated Indebtedness" means the Securities, any other Senior
Subordinated Indebtedness and any other Indebtedness that is subordinate or
junior in right of payment to Senior Indebtedness.
"Significant Subsidiary" means any Subsidiary which is a
"significant subsidiary" of the Issuer within the meaning of Rule 1.02(w) of
Regulation S-K promulgated by the Commission as in effect on the date of this
Indenture.
"Subsidiary" of any specified Person means any corporation of which
such Person, or such Person and one or more Subsidiaries of such Person, or
any one or more Subsidiaries of such Person, directly or indirectly own voting
securities entitling any one or more of such Persons and its Subsidiaries to
elect a majority of the directors, either at all times or, so long as there is
no default or contingency which permits the holders of any other class or
classes of securities to vote for the election of one or more directors.
"Trust Indenture Act of 1939" (except as otherwise provided in
Sections 8.1 and 8.2) means the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990, as in force at the date as of which this
Indenture is originally executed.
"Trustee" means the Person identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Six, shall also
include any successor trustee. "Trustee" shall also mean or include each
Person who is then a trustee hereunder and, if at any time there is more than
one such Person, "Trustee" as used with respect to the Securities of any
series shall mean the trustee with respect to the Securities of such series.
"Unrestricted Subsidiary" means (a) any Subsidiary of the Issuer
acquired or organized after the date hereof, provided, however, that such
Subsidiary of the Issuer shall not be a successor, directly or indirectly, to
any Restricted Subsidiary, and (b) any Subsidiary of the Issuer substantially
all the assets of which consist of stock or other securities of a Subsidiary
or Subsidiaries of the Issuer of the character described in clause (a) of this
paragraph, unless and until such Subsidiary shall have been designated to be a
Restricted Subsidiary pursuant to clause (b) of the definition of "Restricted
Subsidiary".
"U.S. Government Obligations" shall have the meaning set forth in
Section 10.1(B).
"vice president", when used with respect to the Issuer or the
Trustee, means any vice president, regardless of whether designated by a
number or a word or words added before or after the title "vice president."
"Yield to Maturity" means the yield to maturity on a series of
Securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with generally accepted financial practice or as
otherwise provided in the terms of such series of Securities.
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ARTICLE TWO
SECURITIES
SECTION 2.1. Forms Generally. The Securities of each series shall be
substantially in such form (not inconsistent with this Indenture) as shall be
established by or pursuant to one or more Board Resolutions (as set forth in a
Board Resolution or, to the extent established pursuant to rather than set
forth in a Board Resolution, an Officers' Certificate detailing such
establishment) or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have
imprinted or otherwise reproduced thereon such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may
be required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities as evidenced by their
execution of such Securities.
SECTION 2.2. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be
substantially as follows:
This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
________________________, as Trustee
By_______________________________
Authorized Signatory
If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Securities of such series shall
bear, in addition to the Trustee's certificate of authentication, an alternate
Certificate of Authentication which shall be substantially as follows:
This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
________________________, as Trustee
By_______________________________
as Authenticating Agent
By_______________________________
Authorized Signatory
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SECTION 2.3. Amount Unlimited Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series and the
Securities of each such series shall rank equally and pari passu with the
Securities of each other series, but all Securities issued hereunder shall be
subordinate and junior in right of payment, to the extent and in the manner
set forth in Article Thirteen, to all Senior Indebtedness of the Issuer. There
shall be established in or pursuant to one or more Board Resolutions (and, to
the extent established pursuant to rather than set forth in a Board
Resolution, in an Officers' Certificate detailing such establishment) or
established in one or more indentures supplemental hereto, prior to the
initial issuance of Securities of any series:
(1) the designation of the Securities of the series, which shall
distinguish the Securities of such series from the Securities of all
other series;
(2) any limit upon the aggregate principal amount of the Securities
of the series that may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5 or
12.3);
(3) the date or dates on which the principal of the Securities of
the series is payable;
(4) the rate or rates at which the Securities of the series shall
bear interest, if any, the date or dates from which any such interest
shall accrue, on which any such interest shall be payable and on which a
record shall be taken for the determination of Holders to whom any such
interest is payable or the method by which such rate or rates or date or
dates shall be determined or both;
(5) the place or places where and the manner in which the principal
of, premium, if any, and interest, if any, on Securities of the series
shall be payable (if other than as provided in Section 3.2) and the
office or agency for the Securities of the series maintained by the
Issuer pursuant to Section 3.2;
(6) the right, if any, of the Issuer to redeem, purchase or repay
Securities of the series, in whole or in part, at its option and the
period or periods within which, the price or prices (or the method by
which such price or prices shall be determined or both) at which, the
form or method of payment therefor if other than in cash and any terms
and conditions upon which and the manner in which (if different from the
provisions of Article Twelve) Securities of the series may be so
redeemed, purchased or repaid, in whole or in part pursuant to any
sinking fund or otherwise;
(7) the obligation, if any, of the Issuer to redeem, purchase or
repay Securities of the series in whole or in part pursuant to any
mandatory redemption, sinking fund or analogous provisions or at the
option of a Holder thereof and the period or periods within which the
price or prices (or the method by which such price or prices shall be
determined or both) at which, the form or method of payment therefor if
other than in cash and any terms and conditions upon which and the manner
in which (if different from the provisions of Article Twelve) Securities
of the series shall be redeemed, purchased or repaid, in whole or in
part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
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(9) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
acceleration of the maturity thereof;
(10) whether Securities of the series will be issuable as Global
Securities;
(11) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions, the
form and terms of such certificates, documents or conditions;
(12) any trustees, depositaries, authenticating or paying agents,
transfer agents or registrars or any other agents with respect to the
Securities of such series;
(13) any deleted, modified or additional events of default or
remedies or any deleted, modified or additional covenants with respect to
the Securities of such series;
(14) whether the provisions of Article Ten will not be applicable to
Securities of such series;
(15) any provision relating to the issuance of Securities of such
series at an original issue discount (including, without limitation, the
issue price thereof, the rate or rates at which such original issue
discount shall accrete, if any, and the date or dates from or to which or
period or periods during which such original issue discount shall accrete
at such rate or rates);
(16) if other than Dollars, the foreign currency in which payment of
the principal of, premium, if any, and interest, if any, on the
Securities of such series shall be payable;
(17) if other than First Union National Bank is to act as Trustee
for the Securities of such series, the name and Corporate Trust Office of
such Trustee;
(18) if the amounts of payments of principal of, premium, if any,
and interest, if any, on the Securities of such series are to be
determined with reference to an index, the manner in which such amounts
shall be determined;
(19) the terms for conversion or exchange, if any, with respect to
the Securities of such series;
(20) which, if any, of the Eligible Guarantors, shall guarantee the
Securities on the terms set forth in Article Fourteen (each of the other
Eligible Guarantors that guarantee the Securities set forth in Article
Fourteen, if any, a "Guarantor"); and
(21) any other terms of the series.
All Securities of any one series shall be substantially identical,
except as to denomination and except as may otherwise be provided by or
pursuant to the Board Resolution or Officers' Certificate referred to above or
as set forth in any such indenture supplemental hereto. All Securities of any
one series need not be issued at the same time and may be issued from time to
time, consistent with the terms of this Indenture, if so provided by or
pursuant to such Board Resolution, such Officers' Certificate or in any such
indenture supplemental hereto.
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Any such Board Resolution or Officers' Certificate referred to above
with respect to Securities of any series filed with the Trustee on or before
the initial issuance of the Securities of such series shall be incorporated
herein by reference with respect to Securities of such series and shall
thereafter be deemed to be a part of the Indenture for all purposes relating
to Securities of such series as fully as if such Board Resolution or Officers'
Certificate were set forth herein in full.
SECTION 2.4. Authentication and Delivery of Securities. The Issuer
may deliver Securities of any series executed by the Issuer to the Trustee for
authentication together with the applicable documents referred to below in
this Section 2.4, and the Trustee shall thereupon authenticate and deliver
such Securities to, or upon the order of the Issuer (contained in the Issuer
Order referred to below in this Section 2.4) or pursuant to such procedures
acceptable to the Trustee and to such recipients as may be specified from time
to time by an Issuer Order. The maturity date, original issue date, interest
rate, if any, and any other terms of the Securities of such series shall be
determined by or pursuant to such Issuer Order and procedures. If provided for
in such procedures and agreed to by the Trustee, such Issuer Order may
authorize authentication and delivery pursuant to oral instructions from the
Issuer or its duly authorized agent, which instructions shall be promptly
confirmed in writing. In authenticating the Securities of such series and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive (in the case of
subparagraphs (2), (3) and (4) below only at or before the time of the first
request of the Issuer to the Trustee to authenticate Securities of such
series) and (subject to Section 6.1) shall be fully protected in relying upon,
unless and until such documents have been superseded or revoked:
(1) an Issuer Order requesting such authentication and setting forth
delivery instructions provided that, with respect to Securities of a
series subject to a Periodic Offering, (a) such Issuer Order may be
delivered by the Issuer to the Trustee prior to the delivery to the
Trustee of such Securities for authentication and delivery, (b) the
Trustee shall authenticate and deliver Securities of such series for
original issue from time to time, in an aggregate principal amount not
exceeding the aggregate principal amount established for such series,
pursuant to an Issuer Order or pursuant to procedures acceptable to the
Trustee as may be specified from time to time by an Issuer Order, (c) the
maturity date or dates, original issue date or dates, interest rate or
rates, if any, and any other terms of Securities of such series shall be
determined by an Issuer Order or pursuant to such procedures, (d) if
provided for in such procedures, such Issuer Order may authorize
authentication and delivery pursuant to oral or electronic instructions
from the Issuer or its duly authorized agent or agents, which oral
instructions shall be promptly confirmed in writing and (e) after the
original issuance of the first Security of such series to be issued, any
separate request by the Issuer that the Trustee authenticate Securities
of such series for original issuance will be deemed to be a certification
by the Issuer that it is in compliance with all conditions precedent
provided for in this Indenture relating to the authentication and
delivery of such Securities;
(2) the Board Resolution, Officers' Certificate or executed
supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant
to which the forms and terms of the Securities of such series were
established;
(3) an Officers' Certificate setting forth the form or forms and
terms of the Securities stating that the form or forms and terms of the
Securities have been established pursuant to Sections 2.1 and 2.3 and
comply with this Indenture and covering such other matters as the Trustee
may reasonably request; and
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(4) at the option of the Issuers, either an Opinion of Counsel, or a
letter from legal counsel addressed to the Trustee permitting it to rely
on an Opinion of Counsel, substantially to the effect that:
(a) the form or forms of the Securities of such series have
been duly authorized and established in conformity with the
provisions of this Indenture;
(b) in the case of an underwritten offering, the terms of the
Securities of such series have been duly authorized and established
in conformity with the provisions of this Indenture, and, in the
case of an offering that is not underwritten, certain terms of the
Securities of such series have been established pursuant to a Board
Resolution, an Officers' Certificate or a supplemental indenture in
accordance with this Indenture, and when such other terms as are to
be established pursuant to procedures set forth in an Issuer Order
shall have been established, all such terms will have been duly
authorized by the Issuer and will have been established in
conformity with the provisions of this Indenture;
(c) when the Securities of such series have been executed by
the Issuer and the Securities of such series have been authenticated
by the Trustee in accordance with the provisions of this Indenture
and delivered to and duly paid for by the purchasers thereof, they
will have been duly issued under this Indenture and will be valid
and legally binding obligations of the Issuer, enforceable in
accordance with their respective terms, and will be entitled to the
benefits of this Indenture; and
(d) the execution and delivery by the Issuer of, and the
performance by the Issuer of its obligations under, the Securities
of such series will not contravene any provision of applicable law
or the articles of incorporation or bylaws of the Issuer or any
agreement or other instrument binding upon the Issuer or any of its
Subsidiaries that is material to the Issuer and its Subsidiaries,
considered as one enterprise, or, to such counsel's knowledge after
the inquiry indicated therein (which shall be reasonable), any
judgment, order or decree of any governmental agency or any court
having jurisdiction over the Issuer or any Subsidiary of the Issuer,
and no consent, approval or authorization of any governmental body
or agency is required for the performance by the Issuer of its
obligations under the Securities, except such as are specified and
have been obtained and such as may be required by the securities or
blue sky laws of the various states in connection with the offer and
sale of the Securities.
In addition, if the authentication and delivery relates to a new
series of Securities created by an indenture supplemental hereto, such Opinion
of Counsel shall also state that all laws and requirements with respect to the
form and execution by the Issuer of the supplemental indenture with respect to
the series of Securities have been complied with, the Issuer has corporate
power to execute and deliver any such supplemental indenture and has taken all
necessary corporate action for those purposes and any such supplemental
indenture has been executed and delivered and constitutes the legal, valid and
binding obligation of the Issuer enforceable in accordance with its terms.
In rendering such opinions, such counsel may qualify any opinions as
to enforceability by stating that such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium and other
similar laws affecting the rights and remedies of creditors and is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the State of New
Jersey and the federal law of the United States, upon opinions of other
counsel (copies of which
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shall be delivered to the Trustee), who shall be counsel reasonably
satisfactory to the Trustee, in which case the opinion shall state that such
counsel believes that both such counsel and the Trustee are entitled so to
rely. Such counsel may also state that, insofar as such opinion involves
factual matters, such counsel has relied, to the extent such counsel deems
proper, upon certificates of officers of the Issuer and its Subsidiaries and
certificates of public officials.
The Trustee shall have the right to decline to authenticate and
deliver any Securities of any series under this Section 2.4 if the Trustee,
being advised by counsel, determines that such action may not lawfully be
taken by the Issuer, or if the Trustee in good faith by its board of directors
or board of trustees, executive committee or a trust committee of directors or
trustees or Responsible Officers shall determine that such action would expose
the Trustee to personal liability to existing Holders or would adversely
affect the Trustee's own rights, duties or immunities under the Securities,
this Indenture or otherwise.
If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Global
Securities, then the Issuer shall execute and the Trustee shall, in accordance
with this Section 2.4 and the Issuer Order with respect to such series,
authenticate and deliver one or more Global Securities that (i) shall
represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series to be issued in the
form of Global Securities and not yet cancelled, (ii) shall be registered in
the name of the Depositary for such Global Security or Securities or the
nominee of such Depositary, (iii) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions, and (iv) shall bear
a legend substantially to the following effect: "Unless and until it is
exchanged in whole or in part for Securities in definitive registered form,
this Security may not be transferred except as a whole by the Depositary to
the 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."
Each Depositary designated pursuant to Section 2.3 must, at the time
of its designation and at all times while it serves as Depositary, be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and any other applicable statute or regulation.
Reference is made to Section 14.15 concerning execution and delivery
of the Guarantees.
SECTION 2.5. Execution of Securities. The Securities shall be signed
on behalf of the Issuer by the chairman of the Board of Directors, the
president, any vice president or the treasurer of the Issuer, under its
corporate seal which may, but need not, be attested by its secretary or one of
its assistant secretaries. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. The seal of the Issuer
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of a seal or any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall
be authenticated and delivered by the Trustee or disposed of by the Issuer,
such Security nevertheless may be authenticated and delivered or disposed of
as though the person who signed such Security had not ceased to be such
officer of the Issuer; and any Security may be signed on behalf of the Issuer
by such persons as, at the actual date of the execution of such Security,
shall be the proper officers of the Issuer, although at the date of the
execution and delivery of this Indenture any such person was not such an
officer.
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Reference is made to Section 14.15 concerning execution and delivery
of the Guarantees.
SECTION 2.6. Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by the manual signature of one
of its authorized signatories, or its Authenticating Agent, shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
The execution of such certificate by the Trustee or its Authenticating Agent
upon any Security executed by the Issuer shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture. Each
reference in this Indenture to authentication by the Trustee includes
authentication by an agent appointed pursuant to Section 6.14.
Reference is made to Section 14.15 concerning execution and delivery
of the Guarantees.
SECTION 2.7. Denomination and Date of Securities; Payments of
Interest. The Securities of each series shall be issuable in registered form
in denominations established as contemplated by Section 2.3 or, with respect
to the Securities of any series, if not so established, in denominations of
$1,000 and any integral multiple thereof. The Securities of each series shall
be numbered, lettered or otherwise distinguished in such manner or in
accordance with such plan as the officers of the Issuer executing the same may
determine with the approval of the Trustee, as evidenced by the execution and
authentication thereof.
Each Security shall be dated the date of its authentication. The
Securities of each series shall bear interest, if any, from the date, and such
interest, if any, shall be payable on the dates, established as contemplated
by Section 2.3.
The Person in whose name any Security of any series is registered at
the close of business on any record date applicable to a particular series
with respect to any interest payment date for such series shall be entitled to
receive the interest, if any, payable on such interest payment date
notwithstanding any transfer or exchange of such Security subsequent to the
record date and prior to such interest payment date, except if and to the
extent the Issuer shall default in the payment of the interest due on such
interest payment date for such series, in which case such defaulted interest
shall be paid to the Persons in whose names Outstanding Securities for such
series are registered (a) at the close of business on a subsequent record date
(which shall be not less than five Business Days prior to the date of payment
of such defaulted interest) established by notice given by mail by or on
behalf of the Issuer to the Holders of Securities not less than 15 days
preceding such subsequent record date or (b) as determined by such other
procedure as is mutually acceptable to the Issuer and the Trustee. The term
"record date" as used with respect to any interest payment date (except a date
for payment of defaulted interest) for the Securities of any series shall mean
the date specified as such in the terms of the Securities of such series
established as contemplated by Section 2.3, or, if no such date is so
established, if such interest payment date is the first day of a calendar
month, the fifteenth day of the next preceding calendar month or, if such
interest payment date is the fifteenth day of a calendar month, the first day
of such calendar month, whether or not such record date is a Business Day.
SECTION 2.8. Registration, Transfer and Exchange. The Issuer will
keep at each office or agency to be maintained for the purpose as provided in
Section 3.2 for each series of Securities a register or registers in which,
subject to such reasonable regulations as it may prescribe, it will provide
for the registration of Securities of each series and the registration of
transfer of Securities of such series. Each such register shall be in written
form in the English language or in any other form capable of being converted
into such form within a reasonable time. At all reasonable times such register
or registers shall be open for inspection and available for copying by the
Trustee.
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Upon due presentation for registration of transfer of any Security
of any series at any such office or agency to be maintained for the purpose as
provided in Section 3.2, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities of the same series, maturity date, interest rate, if
any, and original issue date in authorized denominations for a like aggregate
principal amount.
All Securities presented for registration of transfer shall (if so
required by the Issuer or the Trustee) be duly endorsed by, or be accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Issuer and the Trustee duly executed by, the Holder or his attorney duly
authorized in writing.
At the option of the Holder thereof, Securities of any series (other
than a Global Security, except as set forth below) may be exchanged for a
Security or Securities of such series having authorized denominations and an
equal aggregate principal amount, upon surrender of such Securities to be
exchanged at the agency of the Issuer that shall be maintained for such
purpose in accordance with Section 3.2.
The Issuer may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
registration of transfer of Securities. No service charge shall be made for
any such transaction or for any exchange of Securities of any series as
contemplated by the immediately preceding paragraph.
The Issuer shall not be required to exchange or register a transfer
of (a) any Securities of any series for a period of 15 days next preceding the
first mailing or publication of notice of redemption of Securities of such
series to be redeemed, (b) any Securities selected, called or being called for
redemption, in whole or in part, except, in the case of any Security to be
redeemed in part, the portion thereof not so to be redeemed or (c) any
Security if the Holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Security in whole or in part, except the portion of
such Security not required to be repurchased.
Notwithstanding any other provision of this Section 2.8, unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, a Global Security representing all or a part of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series
or a nominee of such successor Depositary.
If at any time the Depositary for any Securities of a series
represented by one or more Global Securities notifies the Issuer that it is
unwilling or unable to continue as Depositary for such Securities or if at any
time the Depositary for such Securities shall no longer be eligible under
Section 2.4, the Issuer shall appoint a successor Depositary with respect to
such Securities. If a successor Depositary for such Securities is not
appointed by the Issuer within 90 days after the Issuer receives such notice
or becomes aware of such ineligibility, the Issuer's election pursuant to
Section 2.3 that such Securities be represented by one or more Global
Securities shall no longer be effective and the Issuer shall execute, and the
Trustee, upon receipt of an Issuer Order for the authentication and delivery
of definitive Securities of such series, will authenticate and deliver
Securities of such series in definitive registered form, in any authorized
denominations, in an aggregate principal amount equal to the principal amount
of the Global Security or Securities representing such Securities in exchange
for such Global Security or Securities.
The Issuer may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global
Securities shall no longer be represented by a Global
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Security or Securities. In such event the Issuer shall execute, and the
Trustee, upon receipt of an Issuer Order for the authentication and delivery
of definitive Securities of such series, shall authenticate and deliver,
Securities of such series in definitive registered form, in any authorized
denominations, in an aggregate principal amount equal to the principal amount
of the Global Security or Securities representing such Securities, in exchange
for such Global Security or Securities.
If specified by the Issuer pursuant to Section 2.3 with respect to
Securities represented by a Global Security, the Depositary for such Global
Security may surrender such Global Security in exchange in whole or in part
for Securities of the same series in definitive registered form on such terms
as are acceptable to the Issuer and such Depositary. Thereupon, the Issuer
shall execute, and the Trustee shall authenticate and deliver, without service
charge,
(i) to the Person specified by such Depositary, a new Security
or Securities of the same series, of any authorized denominations as
requested by such Person, in an aggregate principal amount equal to
and in exchange for such Person's beneficial interest in the Global
Security; and
(ii) to such Depositary a new Global Security in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of
Securities authenticated and delivered pursuant to clause (i) above.
Upon the exchange of a Global Security for Securities in definitive
registered form in authorized denominations, such Global Security shall be
cancelled by the Trustee or an agent of the Trustee. Securities in definitive
registered form issued in exchange for a Global Security pursuant to this
Section 2.8 shall be registered in such names and in such authorized
denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Trustee or the Issuer or an agent of
the Issuer. The Trustee or such agent shall deliver at its office such
Securities to or as directed by the Persons in whose names such Securities are
so registered.
All Securities issued upon any registration of transfer or exchange
of Securities shall be valid and legally binding obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall become
mutilated, defaced or be destroyed, lost or stolen, the Issuer in its
discretion may execute, and upon the written request of any officer of the
Issuer, the Trustee shall authenticate and deliver a new Security of the same
series, maturity date, interest rate, if any, and original issue date, bearing
a number or other distinguishing symbol not contemporaneously outstanding, in
exchange and substitution for the mutilated or defaced Security, or in lieu of
and in substitution for the Security so destroyed, lost or stolen. In every
case the applicant for a substitute Security shall furnish to the Issuer and
to the Trustee and any agent of the Issuer or the Trustee such security or
indemnity as may be required by the Trustee or the Issuer or any such agent to
indemnify and defend and to save each of the Trustee and the Issuer and any
such agent harmless and, in every case of destruction, loss or theft, evidence
to their satisfaction of the destruction, loss or theft of such Security and
of the ownership thereof and in the case of mutilation or defacement, shall
surrender the Security to the Trustee or such agent.
Upon the issuance of any substitute Security, the Issuer may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee or its agent) connected therewith. In
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case any Security which has matured or is about to mature or has been called
for redemption in full shall become mutilated or defaced or be destroyed, lost
or stolen, the Issuer may instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the
case of a mutilated or defaced Security), if the applicant for such payment
shall furnish to the Issuer and to the Trustee and any agent of the Issuer or
the Trustee such security or indemnity as any of them may require to hold each
of them harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Issuer and the Trustee and any agent of
the Issuer or the Trustee evidence to the Trustee's satisfaction of the
destruction, loss or theft of such Security and of the ownership thereof.
Every substitute Security of any series issued pursuant to the
provisions of this Section by virtue of the fact that any such Security is
destroyed, lost or stolen shall constitute an additional contractual
obligation of the Issuer, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone and shall be entitled to
all the benefits of (but shall be subject to all the limitations of rights set
forth in) this Indenture equally and proportionately with any and all other
Securities of such series duly authenticated and delivered hereunder. All
Securities shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, defaced, destroyed, lost or stolen
Securities and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments
or other securities without their surrender.
SECTION 2.10. Cancellation of Securities; Disposition Thereof. All
Securities surrendered for payment, redemption, registration of transfer or
exchange, or for credit against any payment in respect of a sinking or
analogous fund, if surrendered to the Issuer or any agent of the Issuer or the
Trustee or any agent of the Trustee, shall be delivered to the Trustee or its
agent for cancellation or, if surrendered to the Trustee, shall be cancelled
by it; and no Securities shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture. The Trustee shall
dispose of all cancelled Securities in accordance with its standard procedures
and shall deliver a certificate of such disposition to the Company. If the
Issuer or its agent shall acquire any of the Securities, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are delivered to the
Trustee or its agent for cancellation.
SECTION 2.11. Temporary Securities. Pending the preparation of
definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be
issuable in any authorized denomination, and substantially in the form of the
definitive Securities of such series but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Issuer with the concurrence of the Trustee as evidenced by
the execution and authentication thereof. Temporary Securities may contain
such references to any provisions of this Indenture as may be appropriate.
Every temporary Security shall be executed by the Issuer and be authenticated
by the Trustee upon the same conditions and in substantially the same manner,
and with like effect, as the definitive Securities. Without unreasonable delay
the Issuer shall execute and shall furnish definitive Securities of such
series and thereupon temporary Securities of such series may be surrendered in
exchange therefor without charge at each office or agency to be maintained by
the Issuer for that purpose pursuant to Section 3.2 and the Trustee shall
authenticate and deliver in exchange for such temporary Securities of such
series an equal aggregate principal amount of definitive Securities of the
same series having authorized denominations. Until so exchanged, the temporary
Securities of any series shall be entitled to the same benefits under this
Indenture as definitive Securities of such series, unless otherwise
established pursuant to Section 2.3.
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SECTION 2.12. CUSIP Numbers. The Issuer in issuing the Securities
may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Securities
or as contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Securities, and any
such redemption shall not be affected by any defect in or omission of such
numbers.
ARTICLE THREE
COVENANTS
SECTION 3.1. Payment of Principal and Interest. The Issuer covenants
and agrees that it will duly and punctually pay or cause to be paid the
principal of, premium, if any, and interest, if any, on each of the Securities
at the place, at the respective times and in the manner provided in the
Securities.
SECTION 3.2. Offices for Notices and Payments, etc. So long as any
of the Securities are Outstanding, the Issuer will maintain in each Place of
Payment, an office or agency where the Securities may be presented for
payment, an office or agency where the Securities may be presented for
registration of transfer and for exchange as provided in this Indenture, and
an office or agency where notices and demands to or upon the Issuer in respect
of the Securities or of this Indenture may be served. In case the Issuer shall
at any time fail to maintain any such office or agency, or shall fail to give
notice to the Trustee of any change in the location thereof, presentation may
be made and notice and demand may be served in respect of the Securities or of
this Indenture at the Corporate Trust Office. The Issuer hereby initially
designates the Corporate Trust Office for each such purpose and appoints the
Trustee as registrar and paying agent and as the agent upon whom notices and
demands may be served with respect to the Securities.
SECTION 3.3. No Interest Extension. In order to prevent any
accumulation of claims for interest after maturity thereof, the Issuer will
not directly or indirectly extend or consent to the extension of the time for
the payment of any claim for interest on any of the Securities and will not
directly or indirectly be a party to or approve any such arrangement by the
purchase or funding of said claims or in any other manner; provided, however,
that this Section 3.3 shall not apply in any case where an extension shall be
made pursuant to a plan proposed by the Issuer to the Holders of all
Securities of any series then Outstanding.
SECTION 3.4. Appointments to Fill Vacancies in Trustee's Office. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of the
Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 3.5. Provision as to Paying Agent. (a) If the Issuer shall
appoint a paying agent other than the Trustee, it will cause such paying agent
to execute and deliver to the Trustee an instrument in which such paying agent
shall agree with the Trustee, subject to the provisions of this Section 3.5,
(1) that it will hold all sums held by it as such paying agent for
the payment of the principal of or interest, if any, on the Securities
(whether such sums have been paid to it by the Issuer or by any other
obligor on the Securities) in trust for the benefit of the Holders of the
Securities and the Trustee; and
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(2) (that it will give the Trustee notice of any failure by the
Issuer (or by any other obligor on the Securities) to make any payment of
the principal of, premium, if any, or interest, if any, on the Securities
when the same shall be due and payable; and
(3) that it will, at any time during the continuance of any such
failure, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such paying agent.
(b) If the Issuer shall act as its own paying agent, it will, on or
before each due date of the principal of or interest, if any, on the
Securities, set aside, segregate and hold in trust for the benefit of the
Holders of the Securities a sum sufficient to pay such principal, premium, if
any, or interest, if any, so becoming due and will notify the Trustee of any
failure to take such action and of any failure by the Issuer (or by any other
obligor under the Securities) to make any payment of the principal of,
premium, if any, or interest, if any, on the Securities when the same shall
become due and payable.
(c) Anything in this Section 3.5 to the contrary notwithstanding,
the Issuer may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid
to the Trustee all sums held in trust by it, or any paying agent hereunder, as
required by this Section 3.5, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 3.5 to the contrary notwithstanding,
any agreement of the Trustee or any paying agent to hold sums in trust as
provided in this Section 3.5 is subject to Sections 10.3 and 10.4.
(e) Whenever the Issuer shall have one or more paying agents, it
will, on or before each due date of the principal of or interest, if any, on
any Securities, deposit with a paying agent a sum sufficient to pay the
principal, premium, if any, or interest, if any, so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such principal,
premium, if any, or interest, if any, and (unless such paying agent is the
Trustee) the Issuer will promptly notify the Trustee of its action or failure
so to act.
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 4.1. Issuer to Furnish Trustee Information as to Names and
Addresses of Securityholders. The Issuer and any other obligor on the
Securities covenant and agree that they will furnish or cause to be furnished
to the Trustee a list in such form as the Trustee may reasonably require of
the names and addresses of the Holders of the Securities of each series:
(a) semiannually and not more than 15 days after each January 1 and
July 1, and
(b) at such other times as the Trustee may request in writing,
within 15 days after receipt by the Issuer of any such request,
provided that if and so long as the Trustee shall be the registrar for such
series, such list shall not be required to be furnished.
SECTION 4.2. Preservation and Disclosure of Securityholders Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders of
each series of Securities (i) contained in the most recent list furnished to it
as
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provided in Section 4.1, and (ii) received by it in the capacity of registrar
or paying agent for such series, if so acting. The Trustee may destroy any
list furnished to it as provided in Section 4.1 upon receipt of a new list so
furnished.
(b) In case three or more Holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to
the Trustee reasonable proof that each such applicant has owned a Security for
a period of at least six months preceding the date of such application, and
such application states that the applicants desire to communicate with other
Holders of Securities of a particular series (in which case the applicants
must all hold Securities of such series) or with Holders of all Securities
with respect to their rights under this Indenture or under such Securities and
such application is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt of such application, at its
election, either
(i) afford to such applicants access to the information preserved at
the time by the Trustee in accordance with the provisions of subsection
(a) of this Section 4.2, or
(ii) inform such applicants as to the approximate number of Holders
of Securities of such series or of all Securities, as the case may be,
whose names and addresses appear in the information preserved at the time
by the Trustee, in accordance with the provisions of subsection (a) of
this Section 4.2, and as to the approximate cost of mailing to such
Securityholders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford to such applicants access
to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of such series or all Holders of
Securities, as the case may be, whose name and address appears in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2 a copy of the form of proxy
or other communication which is specified in such request, with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the Holders
of Securities of such series or of all Securities, as the case may be, or
would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter
an order refusing to sustain any of such objections or if, after the entry of
an order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met, and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Securityholders with reasonable promptness
after the entry of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such applicants
respecting their application.
(c) Each and every Holder of Securities, by receiving and holding
the same, agrees with the Issuer and the Trustee that neither the Issuer nor
the Trustee nor any agent of the Issuer or the Trustee shall be held
accountable by reason of the disclosure of any such information as to the
names and addresses of the Holders of Securities in accordance with the
provisions of subsection (b) of this Section 4.2, regardless of the source
from which such information was derived, and that the Trustee shall not be
held accountable by reason of mailing any material pursuant to a request made
under such subsection (b).
SECTION 4.3. Reports by the Issuer. The Issuer covenants:
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(a) to file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe), if any, which the Issuer may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Issuer is not required to file information, documents
or reports pursuant to either of such Sections, then to file with the Trustee
and the Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section
13 of the Exchange Act in respect of a debt security listed and registered on
a national securities exchange as may be prescribed from time to time in such
rules and regulations;
(b) to file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Issuer with the conditions and covenants provided for in this Indenture as
may be required from time to time by such rules and regulations;
(c) to transmit by mail to the Holders of Securities within 30 days
after the filing thereof with the Trustee, in the manner and to the extent
provided in Section 4.4(c), such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to subsections (a) and (b)
of this Section 4.3 as may be required to be transmitted to such Holders by
rules and regulations prescribed from time to time by the Commission; and
(d) furnish to the Trustee, not less than annually, a brief
certificate from the principal executive officer, principal financial officer
or principal accounting officer as to his knowledge of the Issuer's compliance
with all conditions and covenants under this Indenture. For purposes of this
subsection (d), such compliance shall be determined without regard to any
period of grace or requirement of notice provided under this Indenture.
SECTION 4.4. Reports by the Trustee. (a) The Trustee shall transmit
to Holders such reports concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust Indenture Act of 1939 at
the times and in the manner provided pursuant thereto. To the extent that any
such report is required by the Trust Indenture Act of 1939 with respect to any
12 month period, such report shall cover the 12 month period ending July 15
and shall be transmitted by the next succeeding September 15.(a)
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be furnished to the Issuer and be filed by
the Trustee with each stock exchange upon which the Securities of any
applicable series are listed and also with the Commission. The Issuer agrees
to promptly notify the Trustee with respect to any series when and as the
Securities of such series become admitted to trading on any national
securities exchange.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITY HOLDERS
ON EVENT OF DEFAULT
SECTION 5.1. Events of Default. "Event of Default", wherever used
herein with respect to Securities of any series, means any one or more of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Thirteen or otherwise),
unless it is either inapplicable to a particular series or it is specifically
deleted or modified in or pursuant
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to the Board Resolution or supplemental indenture establishing such series of
Securities or in the form of Security, for such series:
(a) default in the payment of the principal of or premium, if any,
of the Securities of such series as and when the same shall become due
and payable either at maturity, upon redemption, by declaration or
otherwise; or
(b) default in the payment of any installment of interest on any of
the Securities of such series as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; or
(c) default in the payment or satisfaction of any sinking fund or
other purchase obligation with respect to Securities of such series, as
and when such obligation shall become due and payable; or
(d) failure on the part of the Issuer or a Guarantor duly to observe
or perform any other of the covenants or agreements on the part of the
Issuer in the Securities of such series or in, or a Guarantor of, this
Indenture continued for a period of 90 days after the date on which
written notice of such failure, requiring the Issuer or a Guarantor to
remedy the same, shall have been given by certified or registered mail to
the Issuer or a Guarantor by the Trustee, or to the Issuer and the
Trustee by the Holders of at least 25% in aggregate principal amount of
the Securities of such series then Outstanding; or
(e) without the consent of the Issuer, a court having jurisdiction
shall enter an order for relief with respect to the Issuer or any of its
Significant Subsidiaries under any applicable bankruptcy, insolvency or
other similar law of the United States of America, any state thereof or
the District of Columbia, or without the consent of the Issuer a court
having jurisdiction shall enter a judgment, order or decree adjudging the
Issuer or any of its Significant Subsidiaries bankrupt or insolvent, or
enter an order for relief for reorganization, arrangement, adjustment or
composition of or in respect of the Issuer or any of its Significant
Subsidiaries under any applicable bankruptcy, insolvency or other similar
law of the United States of America, any state thereof or the District of
Columbia, and the continuance of any such judgment, order or decree is
unstayed and in effect for a period of 60 consecutive days; or
(f) the Issuer or any of its Significant Subsidiaries shall
institute proceedings for entry of an order for relief with respect to
the Issuer or any of its Significant Subsidiaries under any applicable
bankruptcy, insolvency or other similar law of the United States of
America, any state thereof or the District of Columbia or for an
adjudication of insolvency, or shall consent to the institution of
bankruptcy or insolvency proceedings against it, or shall file a petition
seeking, or seek or consent to reorganization, arrangement, composition
or relief under any applicable bankruptcy, insolvency or other similar
law of the United States of America, any state thereof or the District of
Columbia, or shall consent to the filing of such petition or to the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator or similar official of the Issuer or of substantially all of
its property, or the Issuer or any of its Significant Subsidiaries shall
make a general assignment for the benefit of creditors as recognized
under any applicable bankruptcy, insolvency or other similar law of the
United States of America, any state thereof or the District of Columbia;
or
(g) any other Event of Default provided with respect to, or a
Guarantor of, the Securities of such series.
(h) a Guarantee ceases to be in full force and effect (other than in
accordance with the terms of any Guarantee) or a Guarantor denies or
disaffirms its obligations under the Guarantee; or
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If an Event of Default with respect to Securities of any series then
Outstanding occurs and is continuing, then and in each and every such case,
unless the principal of all of the Securities of such series shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Securities of such series then
Outstanding, by notice in writing to the Issuer (and to the Trustee if given
by Securityholders), may declare the principal (or, if the Securities of such
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of such series) of all the Securities
of such series and the interest, if any, accrued thereon to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, notwithstanding anything to the contrary
contained in this Indenture or in the Securities of such series. This
provision, however, is subject to the condition that, if at any time after the
unpaid principal amount (or such specified amount) of the Securities of such
series shall have been so declared due and payable and before any judgment or
decree for the payment of the moneys due shall have been obtained or entered
as hereinafter provided, the Issuer shall pay or shall deposit with the
Trustee a sum sufficient to pay all matured installments of interest, if any,
upon all of the Securities of such series and the principal of any and all
Securities of such series which shall have become due otherwise than by
acceleration (with interest on overdue installments of interest, if any, to
the extent that payment of such interest is enforceable under applicable law
and on such principal at the rate borne by the Securities of such series to
the date of such payment or deposit) and the reasonable compensation,
disbursements, expenses and advances of the Trustee and all other amounts due
the Trustee under Section 6.6, and any and all defaults under this Indenture,
other than the nonpayment of such portion of the principal amount of and
accrued interest, if any, on Securities of such series which shall have become
due by acceleration, shall have been cured or shall have been waived in
accordance with Section 5.7 or provision deemed by the Trustee to be adequate
shall have been made therefor, then and in every such case the Holders of a
majority in aggregate principal amount of the Securities of such series then
Outstanding, by written notice to the Issuer and to the Trustee, may rescind
and annul such declaration and its consequences; but no such rescission and
annulment shall extend to or shall affect any subsequent default, or shall
impair any right consequent thereon. Notwithstanding the previous sentence, no
waiver shall be effective against any Holder for any Event of Default or event
which with notice or lapse of time or both would be an Event of Default with
respect to any covenant or provision which cannot be modified or amended
without the consent of the Holder of each outstanding Security affected
thereby, unless all such affected Holders agree, in writing, to waive such
Event of Default or other event.
If any Event of Default with respect to the Issuer specified in
Section 5.1(e) or 5.1(f) occurs, all unpaid principal amount (or, if the
Securities of any series then Outstanding are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of each such series) and accrued interest on all Securities of each
series then Outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act by the Trustee or any
Securityholder.
If the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Issuer, the Trustee and the Securityholders shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Issuer, the Trustee and the Securityholders shall continue as
though no such proceeding had been taken.
Except with respect to an Event of Default pursuant to Section 5.1
(a), (b) or (c), the Trustee shall not be charged with knowledge of any Event
of Default unless written notice thereof shall have been given to a
Responsible Officer by the Issuer, a paying agent or any Securityholder.
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SECTION 5.2. Payment of Securities on Default; Suit Therefor. The
Issuer covenants that (a) if default shall be made in the payment of any
installment of interest upon any of the Securities of any series then
Outstanding as and when the same shall become due and payable, and such
default shall have continued for a period of 30 days, or (b) if default shall
be made in the payment of the principal of any of the Securities of such
series as and when the same shall have become due and payable, whether at
maturity of the Securities of such series or upon redemption or by declaration
or otherwise, then, upon demand of the Trustee, the Issuer will pay to the
Trustee, for the benefit of the Holders of the Securities, the whole amount
that then shall have become due and payable on all such Securities of such
series for principal or interest, if any, or both, as the case may be, with
interest upon the overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) upon the overdue installments of
interest, if any, at the rate borne by the Securities of such series; and, in
addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including a reasonable compensation to the
Trustee, its agents, attorneys and counsel, and any expenses or liabilities
incurred by the Trustee hereunder other than through its negligence or bad
faith.
If the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any
such judgment or final decree against the Issuer or any other obligor on the
Securities of such series and collect in the manner provided by law out of the
property of the Issuer or any other obligor on the Securities of such series,
wherever situated, the moneys adjudged or decreed to be payable.
If there shall be pending proceedings for the bankruptcy or for the
reorganization of the Issuer or any other obligor on the Securities of any
series then Outstanding under any bankruptcy, insolvency or other similar law
now or hereafter in effect, or if a receiver or trustee or similar official
shall have been appointed for the property of the Issuer or such other
obligor, or in the case of any other similar judicial proceedings relative to
the Issuer or other obligor upon the Securities of such series, or to the
creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of the Securities of such series shall
then be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand pursuant to
the provisions of this Section 5.2, shall be entitled and empowered by
intervention in such proceedings or otherwise to file and prove a claim or
claims for the whole amount of principal and interest, if any, owing and
unpaid in respect of the Securities of such series, and, in case of any
judicial proceedings, to 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 and of the Securityholders allowed in such judicial proceedings
relative to the Issuer or any other obligor on the Securities of such series,
its or their creditors, or its or their property, and to collect and receive
any moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses, and any
receiver, assignee or trustee or similar official in bankruptcy or
reorganization is hereby authorized by each of the Securityholders to make
such payments to the Trustee, and, if the Trustee shall consent to the making
of such payments directly to the Securityholders, to pay to the Trustee any
amount due it for compensation and expenses or otherwise pursuant to Section
6.6, including counsel fees and expenses incurred by it up to the date of such
distribution. To the extent that such payment of reasonable compensation,
expenses and counsel fees and expenses out of the estate in any such
proceedings shall be denied for any reason, payment of the same shall be
secured by a lien on, and shall be paid out of, any and all distributions,
dividends, moneys, securities and other property which the Holders of the
Securities of such series may be entitled to receive in such proceedings,
whether in liquidation or under any plan of reorganization or arrangement or
otherwise.
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All rights of action and of asserting claims under this Indenture,
or under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall be for the ratable benefit of the
Holders of the Securities of the series in respect of which such judgment has
been recovered.
SECTION 5.3. Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee pursuant to Section 5.2 with respect to Securities of
any series then Outstanding shall be applied in the order following, at the
date or dates fixed by the Trustee for the distribution of such moneys, upon
presentation of the several Securities of such series, and stamping thereon
the payment, if only partially paid, and upon surrender thereof, if fully
paid:
FIRST: To the payment of costs and expenses of collection and
reasonable compensation to the Trustee, its agents, attorneys and
counsel, and of all other expenses and liabilities incurred, and all
advances made, by the Trustee pursuant to Section 6.6 except as a result
of its negligence or bad faith;
SECOND: If the principal of the Outstanding Securities of such
series shall not have become due and be unpaid, to the payment of
interest, if any, on the Securities of such series, in the order of the
maturity of the installments of such interest, if any, with interest (to
the extent that such interest has been collected by the Trustee) upon the
overdue installments of interest, if any, at the rate borne by the
Securities of such series, such payment to be made ratably to the Persons
entitled thereto;
THIRD: If the principal of the Outstanding Securities of such series
shall have become due, by declaration or otherwise, to the payment of the
whole amount then owing and unpaid upon the Securities of such series for
principal and interest, if any, with interest on the overdue principal
and (to the extent that such interest has been collected by the Trustee)
upon overdue installments of interest, if any, at the rate borne by the
Securities of such series; and in case such moneys shall be insufficient
to pay in full the whole amounts so due and unpaid upon the Securities of
such series, then to the payment of such principal and interest, if any,
without preference or priority of principal over interest or of interest
over principal, or of any installment of interest over any other
installment of interest, or of any Security over any other Security,
ratably to the aggregate of such principal and accrued and unpaid
interest; and
FOURTH: To the payment of any surplus then remaining to the Issuer,
its successors or assigns, or to whomsoever may be lawfully entitled to
receive the same.
No claim for interest which in any manner at or after maturity shall
have been transferred or pledged separate or apart from the Securities to
which it relates, or which in any manner shall have been kept alive after
maturity by an extension (otherwise than pursuant to an extension made
pursuant to a plan proposed by the Issuer to the Holders of all Securities of
any series then Outstanding), purchase, funding or otherwise by or on behalf
or with the consent or approval of the Issuer shall be entitled, in case of a
default hereunder, to any benefit of this Indenture, except after prior
payment in full of the principal of all Securities of any series then
Outstanding and of all claims for interest not so transferred, pledged, kept
alive, extended, purchased or funded.
SECTION 5.4. Proceedings by Securityholders. No Holder of any
Securities of any series then Outstanding shall have any right by virtue of or
by availing of any provision of this Indenture to institute any suit, action
or proceeding in equity or at law upon or under or with respect to this
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Indenture or for the appointment of a receiver or trustee or similar official,
or for any other remedy hereunder, unless such Holder previously shall have
given to the Trustee written notice of default and of the continuance thereof,
as hereinbefore provided, and unless the Holders of not less than 25% in
aggregate principal amount of the Securities of such series then Outstanding
shall have made written request to the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee
for 60 days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding, it being understood and intended, and being expressly covenanted
by the Holder of every Security of such series with every other Holder and the
Trustee, that no one or more Holders of Securities of such series shall have
any right in any manner whatever by virtue of or by availing of any provision
of this Indenture or of the Securities to affect, disturb or prejudice the
rights of any other Holder of such Securities of such series, or to obtain or
seek to obtain priority over or preference as to any other such Holder, or to
enforce any right under this Indenture or the Securities, except in the manner
herein provided and for the equal, ratable and common benefit of all Holders
of Securities of such series.
Notwithstanding any other provisions in this Indenture, but subject
to Article Thirteen, the right of any Holder of any Security to receive
payment of the principal of, premium, if any, and interest, if any, on such
Security, on or after the respective due dates expressed in such Security, or
to institute suit for the enforcement of any such payment on or after such
respective dates shall not be impaired or affected without the consent of such
Holder.
SECTION 5.5. Proceedings by Trustee. In case of an Event of Default
hereunder, the Trustee may in its discretion proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any of such rights, either by suit in equity or by action at law or by
proceedings in bankruptcy or otherwise, whether for the specific enforcement
of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other legal
or equitable right vested in the Trustee by this Indenture or by law.
SECTION 5.6. Remedies Cumulative and Continuing. All powers and
remedies given by this Article Five to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive
of any thereof or of any other powers and remedies available to the Trustee or
the Securityholders, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture, and no delay or omission of the Trustee or of any Securityholder to
exercise any right or power accruing upon any default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be
a waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 5.4, every power and remedy given by this Article Five
or by law to the Trustee or to the Securityholders may be exercised from time
to time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
SECTION 5.7. Direction of Proceedings; Waiver of Defaults by
Majority of Securityholders. The Holders of a majority in aggregate principal
amount of the Securities of any series then Outstanding shall have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to Securities of such series; provided, however, that
(subject to the provisions of Section 6.1) the Trustee shall have the right to
decline to follow any such direction if the Trustee shall determine upon
advice of counsel that the action or proceeding so directed may not lawfully
be taken or if the Trustee in good faith by its board of directors, its
executive committee, or a trust committee of directors or Responsible Officers
or both shall determine that the action or proceeding so directed would
involve the Trustee in personal liability. The Holders of a majority in
aggregate principal amount of the Securities of
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any series then Outstanding may on behalf of the Holders of all of the
Securities of such series waive any past default or Event of Default hereunder
and its consequences except a default in the payment of interest, if any, on,
or the principal of, the Securities of such series. Upon any such waiver the
Issuer, the Trustee and the Holders of the Securities of such series shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon. Whenever any default or Event
of Default hereunder shall have been waived as permitted by this Section 5.7,
said default or Event of Default shall for all purposes of the Securities and
this Indenture be deemed to have been cured and to be not continuing.
SECTION 5.8. Notice of Defaults. The Trustee shall, within 30 days
after the occurrence of a default, with respect to Securities of any series
then Outstanding, mail to all Holders of Securities of such series, as the
names and the addresses of such Holders appear upon the Securities register,
notice of all defaults known to the Trustee with respect to such series,
unless such defaults shall have been cured before the giving of such notice
(the term "defaults" for the purpose of this Section 5.8 being hereby defined
to be the events specified in clauses (a), (b), (c), (d), (e), (f), (g) and
(h) of Section 5.1, not including periods of grace, if any, provided for
therein and irrespective of the giving of the written notice specified in said
clause (d) but in the case of any default of the character specified in said
clause (d) no such notice to Securityholders shall be given until at least 60
days after the giving of written notice thereof to the Issuer pursuant to said
clause (d)); provided, however, that, except in the case of default in the
payment of the principal of or interest, if any, on any of the Securities, or
in the payment or satisfaction of any sinking fund or other purchase
obligation, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee, or a trust
committee of directors or Responsible Officers or both, of the Trustee in good
faith determines that the withholding of such notice is in the best interests
of the Securityholders.
SECTION 5.9. Undertaking to Pay Costs. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the
cost of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 5.9 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Securityholder, or group of Securityholders, holding in the
aggregate more than 10% in principal amount of the Securities of any series
then Outstanding, or to any suit instituted by any Securityholders for the
enforcement of the payment of the principal of or interest, if any, on any
Security against the Issuer on or after the due date expressed in such
Security.
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1. Duties and Responsibilities of the Trustee; During
Default; Prior to Default. In case an Event of Default with respect to the
Securities of a series has occurred (which has not been cured or waived) the
Trustee shall exercise with respect to such series of Securities 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 man would exercise or use under
the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
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(a) prior to the occurrence of an Event of Default with respect to
the Securities of any series and after the curing or waiving of all such
Events of Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect to the
Securities of any series shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable except
for the performance of such duties and obligations as are specifically
set forth in this Indenture, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Holders pursuant to Section 5.7 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that
the repayment of such funds or adequate indemnity against such liability is
not reasonably assured to it.
SECTION 6.2. Certain Rights of the Trustee. Subject to Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction, order or demand of the Issuer mentioned
herein shall be sufficiently evidenced by an Officers' Certificate or Issuer
Order (unless other evidence in respect thereof be herein specifically
prescribed); and any resolution of the Board of Directors may be evidenced to
the Trustee by a Board Resolution;
(c) the Trustee may consult with counsel of its selection and any
advice of such counsel promptly confirmed in writing shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted to be taken by it hereunder in good faith and in reliance thereon
in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the
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provisions of this Indenture (including, without limitation, pursuant to
Section 5.7), unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing so to do by
the Holders of not less than a majority in aggregate principal amount of the
Securities of all series affected then Outstanding; provided that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such expenses or liabilities as a
condition to proceeding; the reasonable expenses of every such investigation
shall be paid by the Issuer or, if paid by the Trustee or any predecessor
Trustee, shall be repaid by the Issuer upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder;
(h) The Trustee shall not be charged with knowledge of any default
or Event of Default with respect to a series of Securities unless either (i) a
Responsible Officer of the Trustee assigned to the Corporate Trust Office of
the Trustee (or any successor division or department of the Trustee) shall
have actual knowledge of such default or Event of Default or (ii) written
notice of such default or Event of Default shall have been given to the
Trustee by the Issuer or any other obligor on such series of Securities or by
any Holder of Securities of such series; and
(i) The Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture.
SECTION 6.3. Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture, of the
Securities or of any prospectus used to sell the Securities. The Trustee shall
not be accountable for the use or application by the Issuer of any of the
Securities or of the proceeds thereof.
SECTION 6.4. Trustee and Agents May Hold Securities; Collections,
etc. The Trustee or any agent of the Issuer or the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee or such agent and,
subject to Sections 6.8 and 6.13, may otherwise deal with the Issuer and
receive, collect, hold and retain collections from the Issuer with the same
rights it would have if it were not the Trustee or such agent.
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SECTION 6.5. Moneys Held by Trustee. Subject to the provisions of
Section 10.4 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the
extent required by mandatory provisions of law. Neither the Trustee nor any
agent of the Issuer or the Trustee shall be under any liability for interest
on any moneys received by it hereunder.
SECTION 6.6. Compensation and Indemnification of Trustee and Its
Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such compensation as shall be
agreed to in writing between the Issuer and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust) and the Issuer covenants and agrees to pay or reimburse the
Trustee and each predecessor Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by or on behalf of it in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad
faith. The Issuer also covenants to indemnify the Trustee and each predecessor
Trustee for, and to hold it harmless against, any and all loss, liability,
damage, claim or expense, including taxes (other than taxes based on the
income of the Trustee), incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and its duties hereunder, including the
costs and expenses of defending itself against or investigating any claim or
liability in the premises. The obligations of the Issuer under this Section
6.6 to compensate and indemnify the Trustee and each predecessor Trustee and
to pay or reimburse the Trustee and each predecessor Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Trustee and shall not be subordinate to the
payment of Senior Indebtedness pursuant to Article Thirteen. Such additional
indebtedness shall be a senior claim to that of the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of particular Securities. When the
Trustee incurs expenses or renders services in connection with an Event of
Default specified in Section 5.1 or in connection with Article Five hereof,
the expenses (including the reasonable fees and expenses of its counsel) and
the compensation for the service in connection therewith are intended to
constitute expenses of administration under any bankruptcy law. The provisions
of this Section 6.6 shall survive the resignation or removal of the Trustee
and the termination of this Indenture.
SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc.
Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts
of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered
or omitted by it under the provisions of this Indenture upon the faith
thereof.
SECTION 6.8. Qualification of Trustee; Conflicting Interests. This
Indenture shall always have a Trustee who satisfies the requirements of
Section 310(a)(1) of the Trust Indenture Act of 1939. The Trustee shall have a
combined capital and surplus of at least $25,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with
Section 310(b) of the Trust Indenture Act of 1939 regarding disqualification
of a trustee upon acquiring a conflicting interest.
SECTION 6.9. Persons Eligible for Appointment as Trustee; Different
Trustees for Different Series. The Trustee for each series of Securities
hereunder shall at all times be a corporation
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organized and doing business under the laws of the United States of America or
of any state or the District of Columbia having a combined capital and surplus
of at least $25,000,000, and which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by
federal, state or District of Columbia authority, or a corporation or other
Person permitted to act as trustee by the Commission. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. No obligor upon the Securities
or any Affiliate of such obligor shall serve as trustee upon the Securities.
In case at any time the Trustee shall cease to be eligible in accordance with
the provisions of this Section 6.9, the Trustee shall resign immediately in
the manner and with the effect specified in Section 6.10.
A different Trustee may be appointed by the Issuer for any series of
Securities prior to the issuance of such Securities. If the initial Trustee
for any series of Securities is to be a trustee other than First Union
National Bank, the Issuer and such Trustee shall, prior to the issuance of
such Securities, execute and deliver an indenture supplemental hereto, which
shall provide for the appointment of such Trustee as Trustee for the
Securities of such series and shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustee.
SECTION 6.10. Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign with respect to one or more or all series of Securities by
giving written notice of resignation to the Issuer. Upon receiving such notice
of resignation, the Issuer shall promptly appoint a successor trustee or
trustees with respect to the applicable series by written instrument in
duplicate, executed by authority of the Board of Directors, one copy of which
instrument shall be delivered to the resigning trustee and one copy to the
successor trustee or trustees. If no successor trustee shall have been so
appointed with respect to any series and have accepted appointment within 30
days after the mailing of such notice of resignation, the resigning trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee, or any Securityholder who has been a bona fide Holder of a
Security or Securities of the applicable series for at least six months may,
subject to the provisions of Section 5.9, on behalf of himself and all others
similarly situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 6.8 with respect to any series of Securities after written
request therefor by the Issuer or by any Securityholder who has been
a bona fide Holder of a Security or Securities of such series for at
least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.9 and shall fail to resign after written
request therefor by the Issuer or by any such Securityholder; or
(iii) the Trustee shall become incapable of acting with respect
to any series of Securities, or shall be adjudged a bankrupt or
insolvent, or a receiver or liquidator of the Trustee or of its
property shall be appointed, or any public officer shall take charge
or
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control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation;
then, in any such case, the Issuer may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such
series by written instrument, in duplicate, executed by order of the Board of
Directors one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or, subject to the provisions
of Article Five, any Securityholder who has been a bona fide Holder of a
Security or Securities of such series for at least six months may on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
trustee with respect to such series. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the
Securities of each series then Outstanding may at any time remove the Trustee
with respect to Securities of such series and appoint a successor trustee with
respect to the Securities of such series by delivering to the Trustee so
removed, to the successor trustee so appointed and to the Issuer the evidence
provided for in Section 7.1 of the action in that regard taken by the
Securityholders. If no successor trustee shall have been so appointed with
respect to any series and have accepted appointment within 30 days after the
delivery of such evidence of removal, the Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or any
Securityholder who has been a bona fide Holder of a Security or Securities of
the applicable series for at least six months may, subject to the provisions
of Article Five, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(d) Any resignation or removal of the Trustee with respect to any
series and any appointment of a successor trustee with respect to such series
pursuant to any of the provisions of this Section 6.10 shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
6.11.
SECTION 6.11. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and
obligations with respect to such series of its predecessor hereunder, with
like effect as if originally named as trustee for such series hereunder; but,
nevertheless, on the written request of the Issuer or of the successor
trustee, upon payment of its charges then unpaid, the trustee ceasing to act
shall, subject to Section 10.4, pay over to the successor trustee all moneys
at the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Issuer shall
execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.6.
If a successor trustee is appointed with respect to the Securities
of one or more (but not all) series, the Issuer, the predecessor Trustee and
each successor trustee with respect to the Securities of any applicable series
shall execute and deliver an indenture supplemental hereto which shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and
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duties of the predecessor Trustee with respect to the Securities of any series
as to which the predecessor Trustee is not retiring shall continue to be
vested in the predecessor Trustee, and shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such trustees co-trustees of the same trust and
that each such trustee shall be trustee of a trust or trusts under separate
indentures.
No successor trustee with respect to any series of Securities shall
accept appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor trustee shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9.
Upon acceptance of appointment by any successor trustee as provided
in this Section 6.11, the Issuer shall give notice thereof to the Holders of
Securities of each series affected, by mailing such notice to such Holders at
their addresses as they shall appear on the registry books. If the Issuer
fails to give such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
given at the expense of the Issuer.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee (including the trust created by this
Indenture), shall be the successor of the Trustee hereunder, provided that
such corporation shall be qualified under the provisions of Section 6.8 and
eligible under the provisions of Section 6.9, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any of the Securities of any series shall
have been authenticated but not delivered, any such successor to the Trustee
may adopt the certificate of authentication of any predecessor Trustee and
deliver such Securities so authenticated; and, in case at that time any of the
Securities of any series shall not have been authenticated, any successor to
the Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor Trustee; and in all such
cases such certificate shall have the full force which it is anywhere in the
Securities of such series or in this Indenture provided that the certificate
of the Trustee shall have; provided, that the right to adopt the certificate
of authentication of any predecessor Trustee or to authenticate Securities of
any series in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 6.13. Preferential Collection of Claims Against the Issuer.
The Trustee shall comply with Section 311(a) of the Trust Indenture Act of
1939, excluding any creditor relationship listed in Section 311(b) of the
Trust Indenture Act of 1939. A Trustee who has resigned or been removed shall
be subject to Section 311(a) of the Trust Indenture Act of 1939 to the extent
indicated therein.
SECTION 6.14. Appointment of Authenticating Agent. As long as any
Securities of a series remain Outstanding, the Trustee may, by an instrument
in writing, appoint with the approval of the Issuer an authenticating agent
(the "Authenticating Agent") which shall be authorized to act on behalf of the
Trustee to authenticate Securities, including Securities issued upon exchange,
registration of transfer, partial redemption or pursuant to Section 2.9.
Securities of each such series authenticated by such Authenticating Agent
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee. Whenever
reference is made in this Indenture to the authentication and delivery of
Securities of any series by the Trustee or to the Trustee's Certificate of
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Authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent for such series
and a Certificate of Authentication executed on behalf of the Trustee by such
Authenticating Agent. Such Authenticating Agent shall at all times be a
corporation organized and doing business under the laws of the United States
of America or of any state or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $25,000,000 (determined as provided in Section 6.9 with respect to
the Trustee) and subject to supervision or examination by federal or state
authority.
Any corporation into which any Authenticating Agent may be merged or
converted, or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency
business (including the authenticating agency contemplated by this Indenture)
of any Authenticating Agent, shall continue to be the Authenticating Agent
with respect to all series of Securities for which it served as Authenticating
Agent without the execution or filing of any paper or any further act on the
part of the Trustee or such Authenticating Agent. Any Authenticating Agent may
at any time, and if it shall cease to be eligible shall, resign by giving
written notice of resignation to the Trustee and to the Issuer. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to the Issuer.
Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 6.14 with respect
to one or more series of Securities, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Issuer and the Issuer
shall provide notice of such appointment to all Holders of Securities of such
series in the manner and to the extent provided in Section 11.4. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as Authenticating Agent.
The Issuer agrees to pay to the Authenticating Agent for such series from time
to time reasonable compensation. The Authenticating Agent for the Securities
of any series shall have no responsibility or liability for any action taken
by it as such at the direction of the Trustee.
Sections 6.2, 6.3, 6.4 and 7.3 shall be applicable to any
Authenticating Agent.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1. Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in principal amount of the Securityholders of any or all series may
be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such specified percentage of Securityholders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee. Proof of execution of any instrument
or of a writing appointing any such agent shall be sufficient for any purpose
of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of
the Trustee and the Issuer, if made in the manner provided in this Article
Seven.
SECTION 7.2. Proof of Execution of Instruments and of Holding of
Securities. Subject to Sections 6.1 and 6.2, the execution of any instrument
by a Securityholder or his agent or proxy may be proved in the following
manner:
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(a) The fact and date of the execution by any Holder of any
instrument may be proved by the certificate of any notary public or other
officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the person executing such instruments acknowledged to
him the execution thereof, or by an affidavit of a witness to such execution
sworn to before any such notary or other such officer. Where such execution is
by or on behalf of any legal entity other than an individual, such certificate
or affidavit shall also constitute sufficient proof of the authority of the
person executing the same.
(b) The ownership of Securities shall be proved by the Security
register or by a certificate of the Security registrar.
SECTION 7.3. Holders to be Treated as Owners. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the
Person in whose name any Security shall be registered upon the Security
register for such series as the absolute owner of such Security (whether or
not such Security shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of and, subject to the provisions of this
Indenture, interest, if any, on such Security and for all other purposes; and
neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee
shall be affected by any notice to the contrary.
SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Outstanding Securities of any or all series have concurred in any direction,
consent or waiver under this Indenture, Securities which are owned by the
Issuer or by any other obligor on the Securities with respect to which such
determination is being made or by any Affiliate of the Issuer or any other
obligor on the Securities with respect to which such determination is being
made shall be disregarded and deemed not to be Outstanding for the purpose of
any such determination, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver
only Securities which a Responsible Officer of the Trustee knows are so owned
shall be so disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Issuer or any other obligor upon
the Securities or any Affiliate of the Issuer or any other obligor on the
Securities. In case of a dispute as to such right, the advice of counsel shall
be full protection in respect of any decision made by the Trustee in
accordance with such advice. Upon request of the Trustee, the Issuer shall
furnish to the Trustee promptly an Officers' Certificate listing and
identifying all Securities, if any, known by the Issuer to be owned or held by
or for the account of any of the above-described Persons; and, subject to
Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Securities not listed therein are Outstanding for the purpose of
any such determination.
SECTION 7.5. Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Trustee, as provided in Section 7.1,
of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action, any Holder of a
Security the serial number of which is shown by the evidence to be included
among the serial numbers of the Securities the Holders of which have consented
to such action may, by filing written notice at the Corporate Trust Office and
upon proof of holding as provided in this Article Seven, revoke such action so
far as concerns such Security provided that such revocation shall not become
effective until three Business Days after such filing. Except as aforesaid,
any such action taken by the Holder of any Security shall be conclusive and
binding upon such Holder and upon all future Holders and owners of such
Security and of any Securities issued in exchange or substitution therefor or
on registration of transfer thereof, irrespective of whether or not any
notation in regard thereto is made upon any such Security. Any action taken by
the Holders of the
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percentage in aggregate principal amount of the Securities of any or all
series, as the case may be, specified in this Indenture in connection with
such action shall be conclusively binding upon the Issuer, the Trustee and the
Holders of all the Securities affected by such action.
SECTION 7.6. Record Date for Consents and Waivers. The Issuer may,
but shall not be obligated to, establish a record date for the purpose of
determining the Persons entitled to (i) waive any past default with respect to
the Securities of such series in accordance with Section 5.7 of the Indenture,
(ii) consent to any supplemental indenture in accordance with Section 8.2 of
the Indenture or (iii) waive compliance with any term, condition or provision
of any covenant hereunder. If a record date is fixed, the Holders on such
record date, or their duly designated proxies, and any such Persons, shall be
entitled to waive any such past default, consent to any such supplemental
indenture or waive compliance with any such term, condition or provision,
whether or not such Holder remains a Holder after such record date; provided,
however, that unless such waiver or consent is obtained from the Holders, or
duly designated proxies, of the requisite principal amount of Outstanding
Securities of such series prior to the date which is the 120th day after such
record date, any such waiver or consent previously given shall automatically
and without further action by any Holder be cancelled and of no further
effect.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a Board Resolution (which
resolution may provide general terms or parameters for such action and may
provide that the specific terms of such action may be determined in accordance
with or pursuant to an Issuer Order), and the Trustee may from time to time
and at any time enter into an indenture or indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act of 1939 as
in force at the date of the execution thereof) for one or more of the
following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee
as security for the Securities of one or more series any property or assets;
(b) to evidence the succession of another Person to the Issuer, or
successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Issuer herein and the Securities
or the Guarantees;
(c) to add to the covenants of the Issuer such further covenants,
restrictions, conditions or provisions for the protection of the Holders of
all or any series of Securities (and if such covenants, restrictions,
conditions or provisions are to be for the protection of less than all series
of Securities, stating that the same are expressly being included solely for
the protection of such series) or to surrender any right or power herein
conferred upon the Issuer, and to make the occurrence, or the occurrence and
continuance, of a default in any such additional covenants, restrictions,
conditions or provisions an Event of Default permitting the enforcement of all
or any of the several remedies provided in this Indenture as herein set forth;
provided, however, that in respect of any such additional covenant,
restriction, condition or provision such supplemental indenture may provide
for a particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for an
immediate enforcement upon such an Event of Default or may limit the remedies
available to the Trustee upon such an Event of Default or may limit the right
of the Holders of a majority in aggregate principal amount of the Securities
of such series to waive such an Event of Default;
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(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make any other provisions as the Issuer may deem necessary or
desirable, provided, however, that no such action shall materially adversely
affect the interests of the Holders of the Securities;
(e) to establish the form or terms of Securities or the Guarantees
to be endorsed thereon of any series as permitted by Sections 2.1 and 2.3;
(f) to provide for the issuance of Securities of any series in
coupon form (including Securities registrable as to principal only) and to
provide for exchangeability of such Securities for the Securities issued
hereunder in fully registered form and to make all appropriate changes for
such purpose;
(g) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the Trust Indenture Act of 1939, or under any similar federal
statute hereafter enacted, and to add to this Indenture such other provisions
as may be expressly permitted by the Trust Indenture Act of 1939, excluding,
however, the provisions referred to in Section 316(a)(2) of the Trust
Indenture Act of 1939 as in effect at the date as of which this instrument was
executed or any corresponding provision provided for in any similar federal
statute hereafter enacted; or
(h) to evidence and provide for the acceptance of appointment
hereunder of a Trustee other than First Union National Bank as Trustee for a
series of Securities and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant to
the requirements of Section 6.9 hereof;
(i) subject to Section 8.2 hereof, to add to or modify the
provisions hereof as may be necessary or desirable to provide for the
denomination of Securities in foreign currencies which shall not adversely
affect the interests of the Holders of the Securities in any material respect;
(j) to modify the covenants or Events of Default of the Issuer
solely in respect of, or add new covenants or Events of Default of the Issuer
that apply solely to, Securities not Outstanding on the date of such
supplemental indenture; and
(k) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one trustee, pursuant to the requirements of
Section 6.11.
The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the
Securities then Outstanding, notwithstanding any of the provisions of Section
8.2.
SECTION 8.2. Supplemental Indentures with Consent of
Securityholders. With the consent (evidenced as provided in Article Seven) of
the Holders of not less than a majority in aggregate
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principal amount of the Securities then Outstanding of any series affected by
such supplemental indenture, the Issuer, when authorized by a Board Resolution
(which resolution may provide general terms or parameters for such action and
may provide that the specific terms of such action may be determined in
accordance with or pursuant to an Issuer Order), and the Trustee may, from
time to time and at any time, enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act of 1939 as in force at the date of execution thereof) for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Securities of such
series; provided, that no such supplemental indenture shall (a) extend the
stated final maturity of the principal of any Security, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest, if any, thereon (or, in the case of an Original Issue Discount
Security, reduce the rate of accretion of original issue discount thereon), or
reduce or alter the method of computation of any amount payable on redemption,
repayment or purchase by the Issuer thereof (or the time at which any such
redemption, repayment or purchase may be made), or make the principal thereof
(including any amount in respect of original issue discount), or interest, if
any, thereon payable in any coin or currency other than that provided in the
Securities or in accordance with the terms of the Securities, or reduce the
amount of the principal of an Original Issue Discount Security that would be
due and payable upon an acceleration of the maturity thereof or the amount
thereof provable in bankruptcy in each case pursuant to Article Five, or
impair or affect the right of any Securityholder to institute suit for the
payment thereof or, if the Securities provide therefor, any right of repayment
or purchase at the option of the Securityholder, in each case without the
consent of the Holder of each Security so affected, or (b) reduce the
aforesaid percentage of Securities of any series, the consent of the Holders
of which is required for any such supplemental indenture, without the consent
of the Holders of each Security so affected. No consent of any Holder of any
Security shall be necessary under this Section 8.2 to permit the Trustee and
the Issuer to execute supplemental indentures pursuant to Sections 8.1 and
9.2.
A supplemental indenture which changes or eliminates any covenant,
Event of Default or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series of
Securities, or which modifies the rights of Holders of Securities of such
series, with respect to such covenant or provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any
other series.
Upon the request of the Issuer, accompanied by a copy of a
resolution of the Board of Directors (which resolution may provide general
terms or parameters for such action and may provide that the specific terms of
such action may be determined in accordance with or pursuant to an Issuer
Order) certified by the secretary or an assistant secretary of the Issuer
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of the Holders of the
Securities as aforesaid and other documents, if any, required by Section 7.1,
the Trustee shall join with the Issuer in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may at its discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the Securityholders
under this Section 8.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 8.2, the
Issuer (or the Trustee at the request and expense of the Issuer) shall give
notice thereof to the Holders of then Outstanding Securities of each series
affected
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thereby, as provided in Section 11.4. Any failure of the Issuer to give such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 8.3. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Trustee, the Issuer and the
Holders of Securities of each series affected thereby shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and shall be deemed to be part of the terms
and conditions of this Indenture for any and all purposes.
SECTION 8.4. Documents to Be Given to Trustee. The Trustee, subject
to the provisions of Sections 6.1 and 6.2, shall be entitled to receive an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant to this Article Eight complies
with the applicable provisions of this Indenture and that all conditions
precedent to the execution and delivery of such supplemental indenture have
been satisfied.
SECTION 8.5. Notation on Securities in Respect of Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article Eight may bear a notation in form approved by the Trustee for such
series as to any matter provided for by such supplemental indenture or as to
any action taken by Securityholders. If the Issuer or the Trustee shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Issuer, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by
the Issuer, authenticated by the Trustee and delivered in exchange for the
Securities of such series then Outstanding.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR OTHER DISPOSITION
SECTION 9.1. Consolidation Permitted, etc., on Certain Terms.
Subject to the provisions of Section 9.2, nothing contained in this Indenture
or in any of the Securities shall prevent any consolidation or merger of the
Issuer with or into any other Person or Persons (whether or not affiliated
with the Issuer), or successive consolidations or mergers in which the Issuer
or its successor or successors shall be a party or parties, or shall prevent
any sale, lease, exchange or other disposition of all or substantially all the
property and assets of the Issuer to any other Person (whether or not
affiliated with the Issuer) authorized to acquire and operate the same;
provided, however, and the Issuer hereby covenants and agrees, that any such
consolidation, merger, sale, lease, exchange or other disposition shall be
upon the conditions that (a) immediately after giving effect to such
consolidation, merger, sale, lease, exchange or other disposition of the
Person (whether the Issuer or such other Person) formed by or surviving any
such consolidation or merger, or to which such sale, lease, exchange or other
disposition shall have been made, no Event of Default, and no event which
after notice or lapse of time or both, would become an Event of Default, shall
have occurred and be continuing; (b) the Person (if other than the Issuer)
formed by or surviving any such consolidation or merger, or to which such
sale, lease, exchange or other disposition shall have been made, shall be a
corporation or partnership organized under the laws of the United States of
America, any state thereof or the District of Columbia; and (c) the due and
punctual payment of the principal of and interest, if any, on all the
Securities, according to their tenor, and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed by the Issuer, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee executed and delivered to the Trustee, by
the Person (if other than the
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Issuer) formed by such consolidation, or into which the Issuer shall have been
merged, or by the Person which shall have acquired or leased such property.
SECTION 9.2. Successor Corporation to be Substituted. In case of any
such consolidation or merger or any sale, conveyance or lease of all or
substantially all of the property of the Issuer and upon the assumption by the
successor Person, by supplemental indenture executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of, premium, if any, and interest, if any, on all of
the Securities and the due and punctual performance of all of the covenants
and conditions of this Indenture to be performed by the Issuer, such successor
Person shall succeed to and be substituted for the Issuer, with the same
effect as if it had been named herein as the party of the first part, and the
Issuer (including any intervening successor to the Issuer which shall have
become the obligor hereunder) shall be relieved of any further obligation
under this Indenture and the Securities; provided, however, that in the case
of a sale, lease, exchange or other disposition of the property and assets of
the Issuer (including any such intervening successor), the Issuer (including
any such intervening successor) shall continue to be liable on its obligations
under this Indenture and the Securities to the extent, but only to the extent,
of liability to pay the principal of, premium, if any, and interest, if any,
on the Securities at the time, places and rate prescribed in this Indenture
and the Securities. Such successor Person thereupon may cause to be signed,
and may issue either in its own name or in the name of the Issuer, any or all
of the Securities issuable hereunder which theretofore shall not have been
signed by the Issuer and delivered to the Trustee; and, upon the order of such
successor Person instead of the Issuer and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously shall have been
signed and delivered by the officers of the Issuer to the Trustee for
authentication, and any Securities which such successor Person thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All
the Securities so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or thereafter
issued in accordance with the terms of this Indenture as though all of such
Securities had been issued at the date of the execution hereof.
In case of any such consolidation or merger or any sale, lease,
exchange or other disposition of all or substantially all of the property and
assets of the Issuer, such changes in phraseology and form (but not in
substance) may be made in the Securities, thereafter to be issued, as may be
appropriate.
SECTION 9.3. Opinion of Counsel to be Given Trustee. The Trustee,
subject to Sections 6.1 and 6.2, shall receive an Officers' Certificate and
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, lease, exchange or other disposition and any such assumption complies
with the provisions of this Article Nine.
ARTICLE TEN
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 10.1. Applicability of Article. Unless specified otherwise
pursuant to Section 2.3 for Securities of a series, this Article shall apply
to each series of Securities issued under this Indenture.
SECTION 10.2. Legal Defeasance And Discharge. The Issuer shall,
subject to the satisfaction of the conditions set forth in Section 10.4
hereof, be deemed to have been discharged from its obligations with respect to
all Outstanding Securities on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Issuer shall be deemed to have paid and discharged
the entire Indebtedness represented by the Outstanding Securities, which shall
thereafter be deemed to be Outstanding only for the purposes of Section 10.5
hereof and the other Sections of this Indenture referred to in clauses (a) and
(b) below, and to have
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satisfied all of its obligations under such Securities and this Indenture (and
the Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments delivered to it by the Issuer acknowledging the same),
except of the following provisions which shall survive until otherwise
terminated or discharged hereunder; (a) the rights of Holder of Outstanding
Securities to receive payments in respect of the principal of, premium, if
any, and interest on such Securities when such payments are due from the trust
referred to below; (b) the Issuer's obligations with respect to the Securities
concerning mutilated, destroyed, lost or stolen Securities and the maintenance
of an office or agency for payment and money for security payments held in
trust; (c) the rights, powers, trusts, duties and immunities of the Trustee,
and the Issuer's obligations in connection therewith; and (d) the Legal
Defeasance provisions of this Indenture.
SECTION 10.3. Covenant Defeasance. The Issuer shall, subject to the
satisfaction of the conditions set forth in Section 10.4 hereof, be released
from its obligations under the covenants contained in Articled Nine and to the
extent described in the applicable supplemental indenture, with respect to any
series of Securities, with respect to the Outstanding Securities on and after
the date of the conditions set forth in Section 10.4 are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not Outstanding for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed Outstanding
for all other purposes hereunder (it being understood that such Securities
shall not be deemed outstanding for accounting purposes). For this purpose,
Covenant Defeasance means that, with respect to the Outstanding Securities,
the Issuer may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall
not constitute a default or an Event of Default under Section 5.1 hereof, but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby. Subject to the satisfaction of the conditions set
forth in Section 10.4 hereof, Sections 5.1(e), 5.1(f) and 5.1(g) hereof shall
not constitute Events of Default or defaults hereunder.
SECTION 10.4. Conditions To Legal Or Covenant Defeasance. The
following shall be the conditions to the application of either Section 10.2 or
10.3 hereof to the Outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuer must irrevocably deposit, or cause to be deposited,
with the Trustee, in trust, for the benefit of the Holders of the Securities,
cash in U.S. dollars, U.S. Government Obligations, or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay, without
reinvestment, the principal of, premium, if any, and interest on the
Outstanding Securities on the stated maturity thereof or on the applicable
redemption date, as the case may be, and the Issuer must specify whether the
Securities are being defeased to maturity or to a particular redemption date;
(b) in the case of Legal Defeasance, the Issuer must deliver to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming
that the Issuer has received from, or there has been published by, the
Internal Revenue Service a ruling, or there has been a change in the
applicable United States federal income tax law after the date of this
Indenture, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Holders of the Outstanding Securities will
not recognize income, gain or loss for United States federal income tax
purposes as a result of such Legal Defeasance, and will be subject to United
States federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
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(c) in the case of Covenant Defeasance, the Issuer must deliver to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the Outstanding Securities will not recognize
income, gain or loss for United States federal income tax purposes as a result
of such Covenant Defeasance, and such Holders will be subject to United States
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a default or Event of
Default resulting from the borrowing of funds to be applied to such deposit)
or insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under, any material
agreement or instrument (other than the Indenture) to which the Issuer or any
of its Restricted Subsidiaries is a party or by which the issuer or any of its
Restricted Subsidiaries is bound;
(f) the Issuer must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Issuer with the intent of
preferring the Holders of the Securities over other creditors of the Issuer,
or with the intent of defeating, hindering, delaying or defrauding creditors
of the Issuer or others;
(g) the Issuer must deliver to the Trustee an Officers' Certificate
and an opinion of Counsel in the United States reasonably acceptable to the
Trustee, each stating that the conditions precedent provided for or relating
to Legal Defeasance or Covenant Defeasance, as applicable, in the case of the
Officer's Certificate, in clauses (a) through (f) and, in the case of the
opinion of Counsel, in clauses (b) and (c) of this paragraph, have been
complied with.
SECTION 10.5. Deposited Money And Government Securities To Be Held
In Trust; Other Miscellaneous Provisions. Subject to Section 10.6 hereof, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively, and
solely for purposes of this Section 10.5, the "Trustee") pursuant to Section
10.4 hereof in respect of the outstanding Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Issuer acting as Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
The Issuer shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable U.S.
Government Obligations deposited pursuant to Section 10.4 hereof or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
Outstanding Securities.
Anything in this Article Ten to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon the request
of the Issuer any money or non-callable U.S. Government Obligations held by it
as provided in Section 10.4 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 10.4(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
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SECTION 10.6. Repayment To Issuer. Any money deposited with the
Trustee or any Paying Agent, or then held by the Issuer, in trust for the
payment of the principal of, premium or interest on any Security and remaining
unclaimed for two years after such principal, and premium, if any, or interest
has become due and payable shall be paid to the Issuer on its request or (if
then held by the Issuer) shall be discharged from such trust; and the Holder
of such Security shall thereafter, as an unsecured creditor, look only to the
Issuer for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Issuer as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at
the expense of the Issuer cause to be published once, in the New York Times
and The Wall Street Journal (national edition), 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 notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer
SECTION 10.7. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or non-callable U.S. Government Obligations in
accordance with Section 10.2 or 10.3 hereof, as the case may be, by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Issuer's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 10.2 or 10.3
hereof until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 10.2 or 10.3 hereof, as the case may
be; provided, however, that, if the Issuer makes any payment of principal of,
premium, if any, or interest on any Security following the reinstatement of
its obligations, the Issuer shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money held by the Trustee
or Paying Agent.
SECTION 10.8. Survival. The Trustee's rights under this Article Ten
shall survive termination of this Indenture.
SECTION 10.9. Satisfaction and Discharge of Indenture. If at any
time (a) the Issuer shall have paid or caused to be paid the principal of,
premium, if any, and interest, if any, on all the Securities Outstanding
(other than Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.9) as and when the same
shall have become due and payable, or (b) the Issuer shall have delivered to
the Trustee for cancellation all Securities theretofore authenticated (other
than Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.9); and if, in any such case, the
Issuer shall also pay or cause to be paid all other sums payable hereunder by
the Issuer (including all amounts, payable to the Trustee pursuant to Section
6.6), then this Indenture shall cease to be of further effect, and the
Trustee, on demand of the Issuer accompanied by an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent relating to
the satisfaction and discharge contemplated by this provision have been
complied with, and at the cost and expense of the Issuer, shall execute proper
instruments acknowledging such satisfaction and discharging this Indenture.
The Issuer agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred, and to compensate the Trustee for
any services thereafter reasonably and properly rendered, by the Trustee in
connection with this Indenture or the Securities.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1. Partners, Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability. No recourse under or
upon any obligation, covenant or agreement contained in this Indenture, or in
any Security, or because of any indebtedness evidenced thereby, shall be
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had against any incorporator, as such or against any past, present or future
stockholder, officer or director, as such, of the Issuer, or any partner of
the Issuer or of any successor, either directly or through the Issuer or any
successor, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of the Securities by the Holders thereof and as part of the
consideration for the issue of the Securities.
SECTION 11.2. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities. Nothing in this Indenture or in the
Securities, expressed or implied, shall give or be construed to give to any
Person, other than the parties hereto and their successors and the Holders of
the Senior Indebtedness and the Holders of the Securities, any legal or
equitable right, remedy or claim under this Indenture or under any covenant or
provision herein contained, all such covenants and provisions being for the
sole benefit of the parties hereto and their successors and of the Holders of
the Securities.
SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Issuer shall bind its successors and assigns,
whether so expressed or not.
SECTION 11.4. Notices and Demands on Issuer, Trustee and Holders of
Securities. Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the Holders
of Securities to or on the Issuer, or as required pursuant to the Trust
Indenture Act of 1939, may be given or served by being deposited postage
prepaid, first-class mail (except as otherwise specifically provided herein)
addressed (until another address of the Issuer is filed by the Issuer with the
Trustee) to Hovnanian Enterprises, Inc., 10 Highway 35, P.O. Box 500, Red
Bank, New Jersey 07701. Any notice, direction, request or demand by the Issuer
or any Holder of Securities to or upon the Trustee shall be deemed to have
been sufficiently given or served by being deposited postage prepaid,
first-class mail (except as otherwise specifically provided herein) addressed
(until another address of the Trustee is filed by the Trustee with the Issuer)
to First Union National Bank, 21 South Street, Morristown, New Jersey 07960,
[attention: Corporate Trust Administration (Hovnanian Enterprises, Inc.
[specify series of Securities])].
Where this Indenture provides for notice to Holders of Securities,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder entitled thereto, at his last address as it appears in the Security
register. Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Issuer when such
notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be reasonably satisfactory to
the Trustee shall be deemed to be sufficient notice.
SECTION 11.5. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, or as required pursuant to the Trust Indenture Act of 1939, the
Issuer shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is
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specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture (other
than a certificate provided pursuant to Section 4.3(d)) and delivered to the
Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition, (b) 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, (c) 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
opinion as to whether or not such covenant or condition has been complied
with, and (d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters, on information with respect to which
is in the possession of the Issuer upon the certificate, statement or opinion
of or representations by an officer or officers of the Issuer unless such
counsel knows that the certificate, statement or opinion or representations
with respect to the matters upon which his certificate, statement or opinion
may be based as aforesaid are erroneous, or in the exercise of reasonable care
should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.
SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays. If
the date of maturity of principal of or interest, if any, on the Securities of
any series or the date fixed for redemption, purchase or repayment of any such
Security shall not be a Business Day, then payment of interest, if any,
premium, if any, or principal need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made
on the date of maturity or the date fixed for redemption, purchase or
repayment, and, in the case of payment, no interest shall accrue for the
period after such date.
SECTION 11.7. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with another provision included in
this Indenture which is required to be included herein by any of Sections 310
to 317, inclusive, or is deemed applicable to this Indenture by virtue of the
provisions, of the Trust Indenture Act of 1939, such required provision shall
control.
SECTION 11.8. GOVERNING LAW. THIS INDENTURE AND EACH SECURITY SHALL
BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND CONSTRUED
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IN ACCORDANCE WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAWS.
SECTION 11.9. Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
SECTION 11.10. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1. Applicability of Article. The provisions of this
Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any sinking fund for the retirement of
Securities of a series except as otherwise specified, as contemplated by
Section 2.3 for Securities of such series.
SECTION 12.2. Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Securities of any series to be redeemed as a
whole or in part at the option of the Issuer shall be given by mailing notice
of such redemption by first class mail, postage prepaid, at least 30 days and
not more than 60 days prior to the date fixed for redemption to such Holders
of Securities of such series at their last addresses as they shall appear in
the Security register. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or
not the Holder receives the notice. Failure to give notice by mail, or any
defect in the notice to the Holder of any Security of a series designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security of such series.
The notice of redemption to each such Holder shall specify (i) the
principal amount of each Security of such series held by such Holder to be
redeemed, (ii) the date fixed for redemption, (iii) the redemption price, (iv)
the place or places of payment, (v) the CUSIP number relating to such
Securities, (vi) that payment will be made upon presentation and surrender of
such Securities, (vii) whether such redemption is pursuant to the mandatory or
optional sinking fund, or both, if such be the case, (viii) whether interest,
if any, (or, in the case of Original Issue Discount Securities, original issue
discount) accrued to the date fixed for redemption will be paid as specified
in such notice and (ix) whether on and after said date interest, if any, (or,
in the case of Original Issue Discount Securities, original issue discount)
thereon or on the portions thereof to be redeemed will cease to accrue. In
case any Security of a series is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Security, a new Security or Securities of such series in
principal amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be redeemed
at the option of the Issuer shall be given by the Issuer or, at the Issuer's
request, by the Trustee in the name and at the expense of the Issuer.
On or before the redemption date specified in the notice of
redemption given as provided in this Section 12.2, the Issuer will deposit
with the Trustee or with one or more paying agents (or, if the Issuer is
acting as its own paying agent, set aside, segregate and hold in trust as
provided in Section 3.5) an amount of money sufficient to redeem on the
redemption date all the Securities of such series so called
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for redemption at the appropriate redemption price, together with accrued
interest, if any, to the date fixed for redemption. The Issuer will deliver to
the Trustee at least 45 days prior to the date fixed for redemption (unless a
shorter notice period shall be satisfactory to the Trustee) an Officers'
Certificate stating the aggregate principal amount of Securities to be
redeemed. In case of a redemption at the election of the Issuer prior to the
expiration of any restriction on such redemption, the Issuer shall deliver to
the Trustee, prior to the giving of any notice of redemption to Holders
pursuant to this Section, an Officers' Certificate stating that such
restriction has been complied with.
If less than all the Securities of a series are to be redeemed, the
Trustee within 10 Business Days after the Issuer gives written notice to the
Trustee that such redemption is to occur, shall select, in such manner as it
shall deem appropriate and fair, Securities of such series to be redeemed.
Notice of the redemption shall be given only after such selection has been
made. Securities may be redeemed in part in multiples equal to the minimum
authorized denomination for Securities of such series or any multiple thereof.
The Trustee shall promptly notify the Issuer in writing of the Securities of
such series selected for redemption and, in the case of any Securities of such
series selected for partial redemption, the principal amount thereof to be
redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities of any
series shall relate, in the case of any Security redeemed or to be redeemed
only in part, to the portion of the principal amount of such Security which
has been or is to be redeemed.
SECTION 12.3. Payment of Securities Called for Redemption. If notice
of redemption has been given as provided by this Article Twelve, the
Securities or portions of Securities specified in such notice shall become due
and payable on the date and at the place or places stated in such notice at
the applicable redemption price, together with interest, if any, accrued to
the date fixed for redemption, and on and after said date (unless the Issuer
shall default in the payment of such Securities at the redemption price,
together with interest, if any, accrued to said date) interest, if any (or, in
the case of Original Issue Discount Securities, original issue discount) on
the Securities or portions of Securities so called for redemption shall cease
to accrue, and such Securities shall cease from and after the date fixed for
redemption (unless an earlier date shall be specified in a Board Resolution,
Officers' Certificate or executed supplemental indenture referred to in
Sections 2.1 and 2.3 by or pursuant to which the form and terms of the
Securities of such series were established) except as provided in Sections 6.5
and 10.4, to be entitled to any benefit or security under this Indenture, and
the Holders thereof shall have no right in respect of such Securities except
the right to receive the redemption price thereof and unpaid interest, if any,
to the date fixed for redemption. On presentation and surrender of such
Securities at a place of payment specified in said notice, said Securities or
the specified portions thereof shall be paid and redeemed by the Issuer at the
applicable redemption price, together with interest, if any, accrued thereon
to the date fixed for redemption; provided that payment of interest, if any,
becoming due on or prior to the date fixed for redemption shall be payable to
the Holders of Securities registered as such on the relevant record date
subject to the terms and provisions of Sections 2.3 and 2.7 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the redemption price shall, until paid or
duly provided for, bear interest from the date fixed for redemption at the
rate of interest or Yield to Maturity (in the case of an Original Issue
Discount Security) borne by such Security.
Upon presentation of any Security redeemed in part only, the Issuer
shall execute and the Trustee shall authenticate and deliver to or on the
order of the Holder thereof, at the expense of the Issuer, a new Security or
Securities of such series, and of like tenor, of authorized denominations, in
principal amount equal to the unredeemed portion of the Security so presented.
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SECTION 12.4. Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and
certificate number in an Officers' Certificate delivered to the Trustee at
least 45 days prior to the last date on which notice of redemption may be
given as being owned of record and beneficially by, and not pledged or
hypothecated by either (a) the Issuer, or (b) a Person specifically identified
in such written statement as an Affiliate of the Issuer.
SECTION 12.5. Mandatory and Optional Sinking Funds. The minimum
amount of any sinking fund payment provided for by the terms of the Securities
of any series is herein referred to as a "mandatory sinking fund payment," and
any payment in excess of such minimum amount provided for by the terms of the
Securities of any series is herein referred to as an "optional sinking fund
payment." The date on which a sinking fund payment is to be made is herein
referred to as the "sinking fund payment date."
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Securities in cash, the Issuer may at
its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise
acquired (except as aforesaid) by the Issuer and delivered to the Trustee for
cancellation pursuant to Section 2.10, (b) receive credit for optional sinking
fund payments (not previously so, credited) made pursuant to this Section
12.5, or (c) receive credit for Securities of such series (not previously so
credited) redeemed by the Issuer through any optional redemption provision
contained in the terms of such series. Securities so delivered or credited
shall be received or credited by the Trustee at the sinking fund redemption
price specified in such Securities.
On or before the 60th day next preceding each sinking fund payment
date for any series, the Issuer will deliver to the Trustee an Officers'
Certificate (a) specifying the portion of the mandatory sinking fund payment
to be satisfied by payment of cash and the portion to be satisfied by credit
of Securities of such series and the basis for such credit, (b) stating that
none of the Securities of such series to be so credited has theretofore been
so credited, (c) stating that no defaults in the payment of interest or Events
of Default with respect to such series have occurred (which have not been
waived or cured or otherwise ceased to exist) and are continuing, and (d)
stating whether or not the Issuer intends to exercise its right to make an
optional sinking fund payment with respect to such series and, if so,
specifying the amount of such optional sinking fund payment which the Issuer
intends to pay on or before the next succeeding sinking fund payment date. Any
Securities of such series to be credited and required to be delivered to the
Trustee in order for the Issuer to be entitled to credit therefor as aforesaid
which have not theretofore been delivered to the Trustee shall be delivered
for cancellation pursuant to Section 2.10 to the Trustee with such Officers'
Certificate (or reasonably promptly thereafter if acceptable to the Trustee).
Such Officers' Certificate shall be irrevocable and upon its receipt by the
Trustee the Issuer shall become unconditionally obligated to make all the cash
payments or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Issuer, on or before any
such 60th day, to deliver such Officers' Certificate and Securities (subject
to the parenthetical clause in the second preceding sentence) specified in
this paragraph, if any, shall not constitute a default but shall constitute,
on and as of such date, the irrevocable election of the Issuer (i) that the
mandatory sinking fund payment for such series due on the next succeeding
sinking fund payment date shall be paid entirely in cash without the option to
deliver or credit Securities of such series in respect thereof, and (ii) that
the Issuer will make no optional sinking fund payment with respect to such
series as provided in this Section 12.5.
If the sinking fund payment or payments (mandatory or optional or
both) to be made in cash on the next succeeding sinking fund payment date plus
any unused balance of any preceding sinking fund payments made in cash shall
exceed $50,000, or a lesser sum if the Issuer shall so request with
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respect to the Securities of any particular series, such cash shall be applied
on the next succeeding sinking fund payment date to the redemption of
Securities of such series at the sinking fund redemption price together with
accrued interest, if any, to the date fixed for redemption. If such amount
shall be $50,000 or less and the Issuer makes no such request, then it shall
be carried over until a sum in excess of $50,000 is available. The Trustee
shall select, in the manner provided in Section 12.2, for redemption on such
sinking fund payment date a sufficient principal amount of Securities of such
series to absorb said cash, as nearly as may be, and shall (if requested in
writing by the Issuer) inform the Issuer of the serial numbers of the
Securities of such series (or portions thereof) so selected. The Issuer, or
the Trustee, in the name and at the expense of the Issuer (if the Issuer shall
so request the Trustee in writing) shall cause notice of redemption of the
Securities of such series to be given in substantially the manner provided in
Section 12.2 (and with the effect provided in Section 12.3) for the redemption
of Securities of such series in part at the option of the Issuer. The amount
of any sinking fund payments not so applied or allocated to the redemption of
Securities of such series shall be added to the next cash sinking fund payment
for such series and, together with such payment, shall be applied in
accordance with the provisions of this Section 12.5. Any and all sinking fund
moneys held on the stated maturity date of the Securities of any particular
series (or earlier, if such maturity is accelerated), which are not held for
the payment or redemption of particular Securities of such series shall be
applied, together with other moneys, if necessary, sufficient for the purpose,
to the payment of the principal of, and interest, if any, on, the Securities
of such series at maturity.
On or before each sinking fund payment date, the Issuer shall pay to
the Trustee in cash or shall otherwise provide for the payment of all
interest, if any, accrued to the date fixed for redemption on Securities to be
redeemed on such sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities
of a series with sinking fund moneys or give any notice of redemption of
Securities for such series by operation of the sinking fund during the
continuance of a default in payment of interest on such Securities or of any
Event of Default with respect to such series except that, where the giving of
notice of redemption of any Securities shall theretofore have been made, the
Trustee shall redeem or cause to be redeemed such Securities, provided that it
shall have received from the Issuer a sum sufficient for such redemption.
Except as aforesaid, and subject to Article Thirteen, any moneys in the
sinking fund for such series at the time when any such default or Event of
Default known to a Responsible Officer of the Trustee shall occur, and any
moneys thereafter paid into the sinking fund, shall, during the continuance of
such default or Event of Default, be deemed to have been collected under
Article Five and held for the payment of all such Securities. In case such
Event of Default shall have been waived as provided in Article Five or the
default cured on or before the 60th day preceding the sinking fund payment
date in any year, such moneys shall thereafter be applied on the next
succeeding sinking fund payment date in accordance with this Section to the
redemption of such Securities.
ARTICLE THIRTEEN
SUBORDINATION
SECTION 13.1. Securities Subordinated to Senior Indebtedness. (a)
The Issuer covenants and agrees, and each Holder of Securities of each series,
by his acceptance thereof, likewise covenants and agrees, that anything in
this Indenture or the Securities of any series to the contrary
notwithstanding, the indebtedness evidenced by the Securities of each series
is subordinate and junior in right of payment, to the extent provided herein,
to all Senior Indebtedness, whether outstanding on the date of execution of
this Indenture or thereafter created, incurred or assumed, and that the
subordination is for the benefit of the holders of Senior Indebtedness but the
Securities shall in all respects rank pari passu
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with all other Senior Subordinated Indebtedness of the Issuer. The Securities
shall rank senior to all existing and future Indebtedness of the Issuer that
is neither Senior Indebtedness nor Senior Subordinated Indebtedness and only
Indebtedness of the Issuer that is Senior Indebtedness shall rank senior to
the Securities in accordance with the provisions set forth herein.
(b) Subject to Section 13.4, if (i) the Issuer shall default in the
payment of any principal of, premium, if any, or interest, if any, on any
Senior Indebtedness when the same becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration of acceleration or
otherwise, or (ii) any other default shall occur with respect to Senior
Indebtedness and the maturity of such Senior Indebtedness has been accelerated
in accordance with its terms, then, upon written notice of such default to the
Issuer and the Trustee by the holders of Senior Indebtedness or any trustee
therefor, unless and until, in either case, the default has been cured or
waived, or has ceased to exist, or any such acceleration has been rescinded or
such Senior Indebtedness has been paid in full, no direct or indirect payment
(in cash, property, securities, by set-off or otherwise) shall be made or
agreed to be made on account of the principal of, premium, if any, or
interest, if any, on any of the Securities, or in respect of any redemption,
retirement, purchase or other acquisition of any of the Securities other than
those made in capital stock of the Issuer (or cash in lieu of fractional
shares thereof).
(c) If any default (other than a default described in paragraph (b)
of this Section 13.1) shall occur under the Senior Indebtedness, pursuant to
which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods occurs (a "Senior Nonmonetary
Default"), then, upon the receipt by the Issuer and the Trustee of written
notice thereof (a "Payment Notice") from or on behalf of holders of such
Senior Indebtedness specifying an election to prohibit such payment and other
action by the Issuer in accordance with the following provisions of this
paragraph (c), the Issuer may not make any payment or take any other action
that would be prohibited by paragraph (b) of this Section 13.1 during the
period (the "Payment Blockage Period") commencing on the date of receipt of
such Payment Notice and ending on the earlier of (i) the date, if any, on
which the holders of such Senior Indebtedness or their representative notify
the Trustee that such Senior Nonmonetary Default is cured or waived or ceases
to exist or the Senior Indebtedness to which such Senior Nonmonetary Default
relates is discharged or (ii) the 179th day after the date of receipt of such
Payment Notice. Notwithstanding the provisions described in the immediately
preceding sentence, the Issuer may resume payments on the Securities following
such Payment Blockage Period. Any number of Payment Notices may be given;
provided, however, that (i) not more than one Payment Notice shall be given
within a period of any 360 consecutive days, and (ii) no default that existed
upon the date of such Payment Notice or the commencement of such Payment
Blockage Period (whether or not such event of default is on the same issue of
Senior Indebtedness) shall be made the basis for the commencement of any other
Payment Blockage Period.
(d) If (i) (A) without the consent of the Issuer, a receiver,
conservator, liquidator or trustee of the Issuer or of any of its property is
appointed by the order or decree of any court or agency or supervisory
authority having jurisdiction, and such decree or order remains in effect for
more than 60 days or (B) the Issuer is adjudicated bankrupt or insolvent or
(C) any of its property is sequestered by court order and such order remains
in effect for more than 60 days or (D) a petition is filed against the Issuer
under any state or federal bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, liquidation or receivership law
of any jurisdiction whether now or hereafter in effect (including without
limitation the Bankruptcy Code), and is not dismissed within 60 days after
such filing; or (ii) the Issuer (A) commences a voluntary case or other
proceeding seeking liquidation, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or other relief with respect to
itself or its debt or other liabilities under any bankruptcy, insolvency or
other similar law now or hereafter in effect (including without limitation the
Bankruptcy Code) or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part
of its property, or (B)
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consents to any such relief or to the appointment of or taking possession by
any such official in an involuntary case or other proceeding commenced against
it, or (C) fails generally to, or cannot, pay its debts generally as they
become due or (D) takes any corporate action to authorize or effect any of the
foregoing; or (iii) any Subsidiary of the Issuer takes, suffers or permits to
exist any of the events or conditions referred to in the foregoing clause (i)
or (ii), then all Senior Indebtedness (including any interest thereon accruing
after the commencement of any such proceedings) shall first be paid in full
before any payment or distribution, whether in cash, securities or other
property, shall be made to any Holder of any Securities on account thereof.
Any payment or distribution, whether in cash, securities or other property
(other than securities of the Issuer or any other corporation provided for by
a plan of reorganization or readjustment the payment of which is subordinate,
at least to the extent provided in these subordination provisions with respect
to the indebtedness evidenced by the Securities to the payment of all Senior
Indebtedness then outstanding and to any securities issued in respect thereof
under any such plan of reorganization or adjustment) which would otherwise
(but for these subordination provisions) be payable or deliverable in respect
of the Securities of any series shall be paid or delivered directly to the
holders of Senior Indebtedness in accordance with the priorities then existing
among such holders until all Senior Indebtedness (including any interest
thereon accruing after the commencement of any such proceedings) shall have
been paid in full. In the event of any such proceeding, after payment in full
of all sums owing with respect to Senior Indebtedness, the Holders of the
Securities, together with the holders of any obligations of the Issuer ranking
on a parity with the Securities, shall be entitled to be paid from the
remaining assets of the Issuer the amounts at the time due and owing on
account of unpaid principal of and interest, if any, on the Securities and
such other obligations before any payment or other distribution, whether in
cash, property or otherwise, shall be made on account of any capital stock or
any obligations of the Issuer ranking junior to the Securities and such other
obligations.
(e) If, notwithstanding the foregoing, any payment or distribution
of any character, whether in cash, securities or other property (other than
securities of the Issuer or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least
to the extent provided in the subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness then outstanding and to any securities issued in respect thereof
under any such plan of reorganization or readjustment), shall be received by
the Trustee or any Holder in contravention of any of the terms hereof, such
payment or distribution of securities shall be received in trust for the
benefit of and shall be paid over or delivered and transferred to the holders
of the Senior Indebtedness then outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full. In the event of the failure of the Trustee or any Holder
to endorse or assign any such payment, distribution or security, each holder
of Senior Indebtedness is hereby irrevocably authorized to endorse or assign
the same.
(f) No present or future holder of any Senior Indebtedness shall be
prejudiced in the right to enforce subordination of the indebtedness evidenced
by the Securities by any act or failure to act on the part of the Issuer or
any Holder of Securities. Nothing contained herein shall impair, as between
the Issuer and the Holders of Securities of each series, the obligation of the
Issuer to pay to such Holders the principal of and interest, if any, on such
Securities or prevent the Trustee or the Holder from exercising all rights,
powers and remedies otherwise permitted by applicable law or hereunder upon a
default or Event of Default hereunder, all subject to the rights of the
holders of the Senior Indebtedness to remove cash, securities or other
property otherwise payable or deliverable to the Holders.
(g) Senior Indebtedness shall not be deemed to have been paid in
full unless the holders thereof shall have received cash, securities or other
property equal to the amount of such Senior Indebtedness then outstanding.
Upon the payment in full of all Senior Indebtedness, the Holders of Securities
of each series shall be subrogated to all rights of any holders of Senior
Indebtedness to receive
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any further payment or distributions applicable to the Senior Indebtedness
until the indebtedness evidenced by the Securities of such series shall have
been paid in full and such payments or distributions received by such Holders,
by reason of such subrogation, of cash, securities or other property which
otherwise would be paid or distributed to the holders of Senior Indebtedness,
shall, as between the Issuer and its creditors other than the holders of
Senior Indebtedness, on the one hand, and such Holders, on the other hand, be
deemed to be a payment by the Issuer on account of Senior Indebtedness, and
not on account of the Securities of such series.
(h) The provisions of this Section 13.1 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Issuer in respect
of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
(i) The securing of any obligations of the Issuer, otherwise ranking
on a parity with the Securities or ranking junior to the Securities, shall not
be deemed to prevent such obligations from constituting, respectively,
obligations ranking on a parity with the Securities or ranking junior to the
Securities.
SECTION 13.2. Reliance on Certificate of Liquidating Agent; Further
Evidence as to Ownership of Senior Indebtedness. Upon any payment or
distribution of assets of the Issuer, the Trustee and the Holders shall be
entitled to rely upon an order or decree issued by any court of competent
jurisdiction in which such dissolution or winding up or liquidation or
reorganization or arrangement proceedings are pending or upon a certificate of
the bankruptcy trustee, receiver, assignee for the benefit of creditors or
other Person making such payment or distribution, delivered to the Trustee or
to the Holders, for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Issuer, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Thirteen. In the absence of any such bankruptcy
trustee, receiver, assignee or other Person, the Trustee shall be entitled to
rely upon written notice by a Person representing himself to be a holder of
Senior Indebtedness (or a trustee or representative on behalf of such holder)
as evidence that such Person is a holder of Senior Indebtedness (or is such a
trustee or representative). If the Trustee determines, in good faith, that
further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distributions
pursuant to this Article Thirteen, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, as to the extent to which
such Person is entitled to participate in such payment or distribution, and to
other facts pertinent to the rights of such Person under this Article
Thirteen, and if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
SECTION 13.3. Payment Permitted If No Default. Nothing contained in
this Article Thirteen or elsewhere in this Indenture, or in any of the
Securities, shall prevent (a) the Issuer at any time, except during the
pendency of any default with respect to Senior Indebtedness described in
Section 13.1(b) or Section 13.1(c) or of any of the events described in
Section 13.1(d), from making payments of the principal of or interest, if any,
on the Securities, or (b) the application by the Trustee or any paying agent
of any moneys deposited with it hereunder to payments of the principal of or
interest, if any, on the Securities, if, at the time of such deposit, the
Trustee or such paying agent, as the case may be, did not have the written
notice provided for in Section 13.5 of any event prohibiting the making of
such deposit, or if, at the time of such deposit (whether or not in trust) by
the Issuer with the Trustee or paying agent (other than the Issuer) such
payment would not have been prohibited by the provisions of this Article
Thirteen, and the Trustee or any paying agent shall not be affected by any
notice to the contrary received by it on or after such date.
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SECTION 13.4. Disputes with Holders of Certain Senior Indebtedness.
Any failure by the Issuer to make any payment on or under any Senior
Indebtedness, other than any Senior Indebtedness as to which the provisions of
this Section 13.4 shall have been waived by the Issuer in the instrument or
instruments by which the Issuer incurred, assumed, guaranteed or otherwise
created such Senior Indebtedness, shall not be deemed a default under Section
13.1 hereof if (i) the Issuer shall be disputing its obligation to make such
payment or perform such obligation, and (ii) either (A) no final judgment
relating to such dispute shall have been issued against the Issuer which is in
full force and effect and is not subject to further review, including a
judgment that has become final by reason of the expiration of the time within
which a party may seek further appeal or review, or (B) if a judgment that is
subject to further review or appeal has been issued, the Issuer shall in good
faith be prosecuting an appeal or other proceeding for review, and a stay of
execution shall have been obtained pending such appeal or review.
SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition.
Anything in this Article Thirteen or elsewhere in this Indenture contained to
the contrary notwithstanding, the Trustee shall not at any time be charged
with knowledge of the existence of any facts which would prohibit the making
of any payment of moneys to or by the Trustee and shall be entitled to assume
conclusively that no such facts exist and that no event specified in clauses
(b) and (c) of Section 13.1 has happened unless and until the Trustee shall
have received an Officers' Certificate to the effect or notice in writing to
that effect signed by or on behalf of the holder or holders, or the
representatives, of Senior Indebtedness who shall have been certified by the
Issuer or otherwise established to the reasonable satisfaction of the Trustee
to be such holder or holders or representatives or from any trustee under any
indenture pursuant to which such Senior Indebtedness shall be outstanding;
provided, however, that, if the Trustee shall not have received the Officers'
Certificate or notice provided for in this Section 13.5 at least three
Business Days preceding the date upon which by the terms hereof any moneys
become payable for any purpose (including, without limitation, the payment of
either the principal of or interest, if any, on any Security), then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to receive such moneys and apply the same to the purpose
for which they were received and shall not be affected by any notice to the
contrary that may be received by it within three Business Days preceding such
date. The Issuer shall give prompt written notice to the Trustee and to each
paying agent of any facts that would prohibit any payment of moneys to or by
the Trustee or any paying agent, and the Trustee shall not be charged with
knowledge of the curing of any default or the elimination of any other fact or
condition preventing such payment or distribution unless and until the Trustee
shall have received an Officers' Certificate to such effect.
SECTION 13.6. Trustee to Effectuate Subordination. Each Holder of
Securities by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate
the subordination as between such Holder and holders of Senior Indebtedness as
provided in this Article Thirteen and appoints the Trustee its
attorney-in-fact for any and all such purposes.
SECTION 13.7. Rights of Trustee as Holder of Senior Indebtedness.
The Trustee shall be entitled to all the rights set forth in this Article
Thirteen with respect to any Senior Indebtedness which may at the time be held
by it, to the same extent as any other holder of Senior Indebtedness and
nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder. Nothing in this Article Thirteen shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.6.
SECTION 13.8. Article Applicable to Paying Agents. In case at any
time any paying agent other than the Trustee shall have been appointed by the
Issuer and be then acting hereunder, the term "Trustee" as used in this
Article Thirteen shall in such case (unless the context shall otherwise
require) be construed as extending to and including such paying agent within
its meaning as fully for all intents and purposes as if the paying agent were
named in this Article Thirteen in addition to or in place
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of the Trustee; provided, however, that Sections 13.5 and 13.7 shall not apply
to the Issuer if it acts as paying agent.
SECTION 13.9. Subordination Rights Not Impaired by Acts or Omissions
of the Issuer or Holders of Senior Indebtedness. No right of any present or
future holders of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Issuer or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Issuer with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with. The
holders of Senior Indebtedness, may at any time or from time to time and in
their absolute direction, change the manner, place or terms of payment, change
or extend the time of payment of, or renew or alter, any such Senior
Indebtedness, or amend or supplement any instrument pursuant to which any such
Senior Indebtedness is issued or by which it may be secured, or release any
security therefor, or exercise or refrain from exercising any other of their
rights under such Senior Indebtedness, including, without limitation, the
waiver of default thereunder, all without notice to or assent from the Holders
of the Securities or the Trustee and without affecting the obligations of the
Issuer, the Trustee or the Holders of Securities under this Article Thirteen.
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of the Senior Indebtedness, and shall not be liable to any such
holders if it shall mistakenly pay over or distribute money or assets to
Securityholders or the Issuer. With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants or obligations as are specifically set forth in this Article
Thirteen and no implied covenants or obligations with respect to holders of
Senior Indebtedness shall be read into this Indenture against the Trustee.
ARTICLE FOURTEEN
SUBORDINATED GUARANTEE
SECTION 14.1. Applicability of Article. The provisions of this
Article shall be applicable to each of the Guarantors specified pursuant to
Section 2.3 for the Guarantee of Securities of a series.
SECTION 14.2. Guarantee. Each Guarantor of a particular series of
Securities hereby unconditionally guarantees (each such guarantee to be
referred to herein as a "Guarantee"), jointly and severally with each other
Guarantor of the Securities of that series, if any, to each Holder of such
Securities authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
this Indenture, such Securities or the obligations of the Company hereunder or
thereunder, (i) the due and punctual payment of the principal of and any
premium or interest on such Securities, whether at maturity or on an interest
payment date, by acceleration, pursuant to an offer to purchase such
Securities or otherwise, and interest on the overdue principal of and
interest, if any, on such Securities, if lawful, and all other obligations of
the Company to the Holders of such Securities or the Trustee hereunder or
thereunder shall be promptly paid in full, all in accordance with the terms
hereof and thereof including all amounts payable to the Trustee under Section
6.6 hereof, and (ii) in case of any extension of time of payment or renewal of
any such Securities or any of such other obligations, the same shall be
promptly paid in full when due or to be performed in accordance with the terms
of the extension or renewal, whether at stated maturity, by acceleration or
otherwise.
If the Company fails to make any payment when due of any amount so
guaranteed for whatever reason, the Guarantor of the Securities of that series
shall be obligated, jointly and severally
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with each other Guarantor, if any, to pay the same immediately. Each Guarantor
hereby agrees that its obligations hereunder shall be continuing, absolute and
unconditional, irrespective of, and shall be unaffected by, the validity,
regularity or enforceability of the Securities, this Indenture, the absence of
any action to enforce the same, any waiver or consent by any Holder of the
Securities or the Trustee with respect to any provisions hereof or thereof,
the recovery of any judgment against the Company, any action to enforce the
same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of such Guarantor. Each Guarantor hereby waives
diligence, presentment, demand of payment, demand of performance, filing of
claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, the benefit of
discussion, protest, notice and all demand whatsoever and covenants that its
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Securities guaranteed by such Guarantee, in this
Indenture and in this Article 14. If any Holder of Securities of a series
guaranteed hereby or the Trustee is required by any court or otherwise to
return to the Company or any Guarantor of such Securities, or any custodian,
trustee, liquidator or other similar official acting in relation to the
Company or any Guarantor, any amount paid by the Company or any Guarantor of
such Securities to the Trustee or such Holder, this Article 14, to the extent
theretofore discharged with respect to any Guarantee of such Securities, shall
be reinstated in full force and effect. Each Guarantor agrees that it shall
not be entitled to any right of subrogation in relation to the Holders of
Securities of a series guaranteed hereby by such Guarantor in respect of any
obligations guaranteed hereby by such Guarantee until payment in full of all
such obligations. Each Guarantor further agrees that, as between such
Guarantor, on the one hand, and the Holders of Securities of a series
guaranteed hereby by such Guarantor and the Trustee on the other hand, (i) the
maturity of the obligations guaranteed hereby may be accelerated as provided
in Article 5 hereof for the purposes of such Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect
of the obligations guaranteed hereby and (ii) in the event of any acceleration
of such obligations as provided in Article 5 hereof such obligations (whether
or not due and payable) shall forthwith become due and payable by such
Guarantor, jointly severally with any other Guarantor of such Securities, for
the purpose of this Article 14. In addition, without limiting the foregoing,
upon the effectiveness of an acceleration under Article 5, the Trustee may
make a demand for payment on the Securities under any Guarantee provided
hereunder and not discharged.
With respect to each Guarantee by a Guarantor, such Guarantor shall
be subrogated to all rights of the Holder of any Securities guaranteed hereby
by such Guarantee against the Company in respect of any amounts paid to such
Holder by such Guarantor pursuant to the provisions of such Guarantee;
provided that the 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 and interest on all such Securities shall have been paid in full.
The Guarantee set forth in this Section 14.1 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by the
Trustee or any duly appointed agent.
The Guarantees provided in this Section 14.1 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by the
Trustee or any duly appointed agent.
SECTION 14.3. Guarantee Subordinated to Senior Debt of the
Guarantor.
Each Guarantor agrees, and each Holder of the Securities by his
acceptance thereof likewise agrees, that the payments pursuant to the
Guarantee by each Guarantor shall be subordinated in accordance with the
following provisions of this Article 14 to the prior payment in full of all
Senior Debt of each Guarantor.
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"Senior Debt of each Guarantor" means the Principal of and interest
on:
(1) all indebtedness for money borrowed by each Guarantor or which
is evidenced by a bond, debenture, note or other similar
instrument or agreement whether or not for money borrowed;
(2) lease obligations of each Guarantor;
(3) all indebtedness, secured or unsecured, in connection with the
acquisition or improvement of any property or asset or the
acquisition of any business by each Guarantor;
(4) all indebtedness secured by any mortgage, lien, pledge, charge
or encumbrance upon property owned by each Guarantor and all
indebtedness secured in the manner specified in this clause (4)
even if a Guarantor has not assumed or become liable for the
payment thereof;
(5) all customer deposits held by each Guarantor in escrow accounts
pending closing of the related sales;
(6) all indebtedness of each Guarantor created or arising under any
conditional sale or other title retention agreement with
respect to property acquired by each Guarantor or otherwise
representing the deferred and unpaid balance of the purchase
price of any such property, including all indebtedness created
or arising in the manner specified in this clause (6) even
though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to
repossession or sale of such property;
(7) guarantees by each Guarantor, direct or indirect, of any
indebtedness of another Person of the types referred to in
clauses (1), (2), (3), (4), (5) or (6); and
(8) contingent obligations of each Guarantor in respect of, or to
purchase or otherwise acquire or be responsible or liable for
through the purchase of products or services, irrespective of
whether such products are delivered or such services are
rendered, any such indebtedness referred to in clauses (1),
(2), (3), (4), (5) or (6),
which indebtedness, lease obligation, deposit, guarantee or contingent
obligation each Guarantor has directly or indirectly created, incurred,
assumed, guaranteed or otherwise become liable or responsible for, whether
currently outstanding or hereafter created. All references to indebtedness
include any renewals, extensions, refundings, amendments and modifications of
any such indebtedness issued in exchange for such indebtedness; provided,
however, that Senior Debt of each Guarantor shall not include, without
limitation (i) a Guarantee, (ii) the guarantee by each Guarantor of the
Subordinated Notes, (iii) accounts payable or any other indebtedness to trade
creditors created or assumed by each Guarantor in the ordinary course of
business in connection with the obtaining of materials or services, (iv) any
liability for federal, state or local taxes owed or owing by each Guarantor
and (v) any indebtedness as to which, in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is provided that
such indebtedness is on a parity with or otherwise not superior in right of
payment to a Guarantee.
This Article 14 shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Debt of each Guarantor, and such
-56-
provisions are made for the benefit of the holders of Senior Debt of each
Guarantor, and such holders are made obligees hereunder and any one or more of
them may enforce such provisions.
SECTION 14.4. Guarantors Not to Make Payments With Respect to
Securities in Certain Circumstances.
(a) Upon the maturity of the principal of any Senior Debt of each
Guarantor (other than payment of sinking fund installments) by
lapse of time, acceleration or otherwise, all principal thereof
and interest thereon shall first be paid in full, or such
payment duly provided for in cash or in a manner satisfactory
to the holders of such Senior Debt of each Guarantor, before
any payment, pursuant to the Guarantee, is made on account of
the principal or interest on the Securities or to acquire any
of the Securities or on account of the mandatory redemption
provisions in the Securities (except mandatory redemption
payments made in respect of Securities acquired by each
Guarantor before the maturity of such Senior Debt of each
Guarantor).
(b) Unless Section 14.4 shall be applicable, upon (1) the
occurrence of a Payment Default with respect to Senior Debt of
each Guarantor and receipt by each Guarantor and the Trustee of
written notice of such occurrence or (2) upon the acceleration
of such indebtedness, then no payment or distribution of any
assets of each Guarantor of any kind or character shall be made
by each Guarantor or the Trustee on account of principal of (or
premium, if any) or interest on the Securities or on account of
the purchase or redemption or other acquisition of Securities,
unless and until such Payment Default shall have been cured or
waived in writing or shall have ceased to exist or such Senior
Debt of each Guarantor shall have been discharged, after which
each Guarantor shall resume making any and all required
payments in respect of the Securities, including any missed
payments.
(c) Unless Section 14.4 shall be applicable, upon (1) the
occurrence of a Non-Payment Default and (2) receipt by the
Trustee of written notice of such occurrence, then no payment
or distribution of any assets of each Guarantor of any kind or
character shall be made by each Guarantor or the Trustee on
account of any principal of (or premium, if any) or interest on
the Securities or on account of the purchase or redemption or
other acquisition of Securities, for a period ("Payment
Blockage Period") commencing on the earlier of the date of
receipt by the Trustee of such written notice from the holder
of Senior Debt of each Guarantor or of the Company, or any
representative of a holder of Senior Debt of each Guarantor or
of the Company unless and until (subject to any blockage of
payment that may then be in effect under subsection (a) of this
Section) the earlier of (x) more than 120 days shall have
elapsed since receipt of such written notice by each Guarantor
or the Trustee, whichever was earlier, (y) such Non-Payment
Default shall have been cured or waived in writing or shall
have ceased to exist or such Senior Debt of each Guarantor or
of the Company shall have been discharged or (z) such Payment
Blockage Period shall have been terminated by written notice to
each Guarantor or to the Company, as the case may be, or to the
Trustee from the holders of the Senior Debt of each Guarantor
or of the Company or any representative of the holders of the
Senior Debt of each Guarantor or of the Company initiating such
Payment Blockage Period, after which, in the case of clause
(x), (y) or (z), each Guarantor shall promptly resume making
any and all required payments in respect of the Securities,
including any missed payments. In no event shall a Payment
Blockage Period extend beyond 120 days from the date of the
receipt by the Trustee of the notice referred to in clause (2)
hereof (the "Initial Period"). Any number of additional Payment
Blockage Periods may be commenced during the Initial Period;
provided, however, that no such additional period shall extend
beyond the Initial Period. After the expiration of the Initial
Period, no Payment Blockage Period may be commenced on the
basis of a Non-Payment Default on the Senior Debt which was the
basis of a Payment Blockage Period commenced during the
-57-
Initial Period until at least 270 consecutive days have elapsed
from the last day of the Initial Period. No Non-Payment Default
which existed or was continuing on the date of the commencement
of any Payment Blockage Period and of which the applicable
Senior Debt holder(s) are aware shall be, or be made, the basis
for the commencement of a second Payment Blockage Period
whether or not within a period of 270 consecutive days unless
such event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
(d) In the event that notwithstanding the provisions of this
Section 14.3 each Guarantor shall make, pursuant to this
Guarantee, any payment or distribution of any character to the
Trustee on account of the principal of or interest on the
Securities, or on account of the mandatory redemption
provisions, after the happening of an event of default with
respect to any Senior Debt of each Guarantor based on a default
in the payment of the principal or interest on Senior Debt of
each Guarantor, or after receipt by the Trustee of written
notice as provided in this Section 14.3 of an Event of Default
with respect to any Senior Debt of each Guarantor, or after the
acceleration of the Securities of any series pursuant to
Section 5.1, then, but only if the Trustee is in receipt of the
notice specified in Section 14.7, unless and until such default
or event of default shall have been cured or waived or shall
have ceased to exist, or such acceleration shall have been
rescinded, such payment (subject to the provisions of Sections
14.7 and 14.8) shall be held by the Trustee in trust for the
benefit of, and, if the Senior Debt of each Guarantor shall
have been declared immediately due and payable, shall be paid
forthwith over and delivered to, the holders of Senior Debt of
each Guarantor (pro rata as to each of such holders on the
basis of the respective amounts of Senior Debt of each
Guarantor held by them) or their representative or the trustee
under the indenture or other agreement (if any) pursuant to
which Senior Debt of each Guarantor may have been issued, as
their respective interests may appear, such payments to be made
in accordance with an Officers' Certificate as provided in
Section 11.5 (on which the Trustee may conclusively rely)
identifying all holders of Senior Debt of each Guarantor and
the principal amount of Senior Debt of each Guarantor then
outstanding held by each and stating the reasons why such
Officers' Certificate is being delivered to the Trustee, for
application to the payment of all Senior Debt of each Guarantor
remaining unpaid to the extent necessary to pay all Senior Debt
of each Guarantor in full in accordance with its terms, after
giving effect to any concurrent payment or distribution to or
for the holders of Senior Debt of each Guarantor. In the event
of the failure of any Holder of a Security to endorse or assign
any such payment or distribution, each holder of Senior Debt of
each Guarantor is hereby irrevocably authorized to endorse or
assign the same. Each Guarantor shall give prompt notice to the
Trustee of any default under any Senior Debt of each Guarantor
or under any agreement pursuant to which Senior Debt of each
Guarantor may have been issued, as required by Section 3.5.
SECTION 14.5. Guarantee Subordinated to Prior Payment of All Senior
Debt of each Guarantor on Dissolution, Winding Up, Liquidation or
Reorganization of a Guarantor.
In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to a Guarantor, its creditors or its property, (ii) any
case or proceeding for the liquidation, dissolution or other winding-up of a
Guarantor, voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings, (iii) any assignment by such Guarantor for the benefit
of creditors, or (iv) any other marshalling of the assets of such Guarantor:
(a) the holders of all Senior Debt of such Guarantor shall first be
entitled to receive payment in full (or to have such payment
duly provided for) of the principal and interest due thereon
(including any interest thereon accruing after commencement of
any such proceeding) before the Holders of the Securities are
entitled to receive, pursuant to this Guarantee any payment or
any distribution,
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whether in cash, securities or other property, on account of
the principal or interest on the Securities;
(b) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities
(other than securities of such Guarantor as reorganized or
readjusted or securities of such Guarantor or any other
company, trust or corporation provided for by a plan of
reorganization or readjustment, junior or the payment of which
is otherwise subordinate, at least to the extent provided in
this Article, to the payment of all Senior Debt of such
Guarantor at the time outstanding and to the payment of all
securities issued in exchange therefor to the holders of the
Senior Debt of such Guarantor at the time outstanding), to
which the Holders of the Securities or the Trustee on behalf of
the Holders of the Securities would be entitled, pursuant to
this Guarantee except for the provisions of this Article 14,
including any such payment or distribution which may be payable
or deliverable by reason of the payment of any other
indebtedness of such Guarantor being subordinated to the
payment of the Securities, shall be paid by the liquidating
trustee or agent or other person making such payment or
distribution directly to the holders of Senior Debt of such
Guarantor or their representative(s), or to the trustee under
any indenture under which Senior Debt of such Guarantor may
have been issued (pro rata as to each such holder,
representative or trustee on the basis of the respective
amounts of unpaid Senior Debt of such Guarantor held or
represented by each), to the extent necessary to make payment
in full of all Senior Debt of such Guarantor remaining unpaid
after giving effect to any concurrent payment or distribution
or provision therefor to the holders of such Senior Debt of
such Guarantor; and
(c) in the event that notwithstanding the foregoing provisions of
this Section 14.4, any payment or distribution of assets of
such Guarantor of any kind or character, whether in cash,
property or securities shall be received, pursuant to the
Guarantee, by the Trustee or the Holders of the Securities on
account of principal or interest on the Securities before all
Senior Debt of such Guarantor is paid in full, or effective
provisions made for its payment, such payment or
distribution(subject to the provisions of Sections 14.7 and
14.8) shall be received and held in trust for and shall be paid
over or delivered to the liquidating trustee, agent or other
person making such payment or distribution or to the holders of
the Senior Debt of such Guarantor remaining unpaid or
unprovided for or their representative, or to the trustee under
any indenture under which Senior Debt of such Guarantor may
have been issued (pro rata as provided in subsection (b)
above), for application to the payment of such Senior Debt of
such Guarantor until all such Senior Debt of such Guarantor
shall have been paid in full, after giving effect to any
concurrent payment or distribution or provision therefor to the
holders of such Senior Debt of such Guarantor.
If a Guarantor effects a transaction permitted by Article Nine, such
transaction shall not be deemed to be a dissolution, winding up, liquidation
or reorganization of such Guarantor for purposes of this Section.
A Guarantor shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of such Guarantor,
assignment for the benefit of creditors by such Guarantor or any other
marshalling of assets of such Guarantor.
-59-
SECTION 14.6. Holders to be Subrogated to Rights of Holders of
Senior Debt of each Guarantor.
Subject to the payment in full of all Senior Debt of each Guarantor,
the Holders of the Securities shall be subrogated to the rights of the holders
of Senior Debt of each Guarantor to receive payments or distributions of
assets of each Guarantor applicable to the Senior Debt of each Guarantor until
all amounts owing under the Guarantee shall be paid in full and for the
purpose of such subrogation no payments or distributions to the holders of
Senior Debt of each Guarantor by virtue of this Article 14 which otherwise
would have been made to the Holders of the Securities, shall, as between each
Guarantor, its creditors other than holders of its Senior Debt of each
Guarantor and the Holders, be deemed to be a payment by each Guarantor to or
on account of the Senior Debt of each Guarantor, it being understood that the
provisions of this Article 14 are solely for the purpose of defining the
relative rights of the holders of Senior Debt of the Guarantors on the one
hand and the Holders on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article shall have been
applied, pursuant to the provisions of this Article, to the payment of Senior
Debt of each Guarantor, then and in such case, the Holders shall be entitled
to receive from the holders of such Senior Debt of each Guarantor at the time
outstanding any payments or distributions received by such holders of such
Senior Debt of each Guarantor in excess of the amount sufficient to pay all
amounts payable under or in respect of such Senior Debt of each Guarantor in
full.
SECTION 14.7. Obligations of each Guarantor Unconditional.
Nothing contained in this Article 14 or elsewhere in this Indenture
or in any Security is intended to or shall impair, as between a Guarantor and
the Holders, the obligations of such Guarantor, which are absolute and
unconditional, to pay to the Holders the principal of and interest on the
Securities as and when the same shall become due and payable in accordance
with the provisions of this Guarantee or is intended to or shall affect the
relative rights of the Holders and creditors of a Guarantor other than the
holders of the Senior Debt of such Guarantor, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon Default under this Indenture,
subject to the rights, if any, under this Article 14 of the holders of Senior
Debt of a Guarantor in respect of cash, property or securities of such
Guarantor received upon the exercise of any such remedy.
Upon any distribution of assets of a Guarantor referred to in this
Article 14, the Trustee, subject to the provisions of Sections 6.1 and 6.2,
and the Holders of the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other person making any
distribution to the Trustee or to the Holders of the Securities, for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Debt and other indebtedness of each
Guarantor, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this
Article 14.
SECTION 14.8. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee, and the Trustee shall not be required to withhold payment to the
Holders of Securities as provided in Section 14.3(d), unless and until the
Trustee shall have received written notice thereof at its Corporate Trust
Office from a Guarantor or from one or more holders of Senior Debt of such
Guarantor or from any representative thereof or trustee
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therefor identifying the specific sections of this Indenture involved and
describing in detail the facts that would obligate the Trustee to withhold
payments to Holders of Securities, as well as any other facts required by the
next succeeding paragraph of this Section 14.7; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections
6.1 and 6.2, shall be entitled to assume conclusively that no such facts
exist.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing himself to be a holder of Senior Debt
of a Guarantor (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Debt of such Guarantor or a
trustee on behalf of any such holder. In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of
any person as a holder of Senior Debt of a Guarantor to participate in any
payment or distribution pursuant to this Article 14, the Trustee may request
such person to furnish evidence to the reasonable satisfaction of the Trustee
as to the amount of Senior Debt of such Guarantor held by such person, the
extent to which such person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such person under
this Article 14, and if such evidence is not furnished the Trustee may defer
any payment to such person pending judicial determination as to the right of
such person to receive such payment.
SECTION 14.9. Application by Trustee of Monies Deposited with It.
Except as provided in Section 10 any deposit of monies by a
Guarantor with the Trustee or any Paying Agent (whether or not in trust) for
the payment of the principal or interest on any Securities shall be subject to
the provisions of Sections 14.2, 14.3, 14.4 and 14.5 except that, if prior to
the opening of business on the date on which by the terms of this Indenture
any such monies may become payable for any purpose (including, without
limitation, the payment, pursuant to this Guarantee, of either the principal
or the interest on any Security) the Trustee shall not have received with
respect to such monies the notice provided for in Section 14.7, then the
Trustee shall have full power and authority to receive such monies and to
apply the same to the purpose for which they were received and shall not be
affected by any notice to the contrary which may be received by it on or after
such date, without, however, limiting any rights that holders of Senior Debt
of a Guarantor may have to recover any such payments from the Holders in
accordance with the provisions of this Article.
SECTION 14.10. Subordination Rights Not Impaired by Acts or
Omissions of a Guarantor or Holders of Senior Debt of such Guarantor.
No right of any present or future holders of any Senior Debt of a
Guarantor to enforce subordination as provided herein shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of such
Guarantor or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by such Guarantor with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Debt of such Guarantor may
extend, renew, modify or amend the terms of the Senior Debt of such Guarantor
or any security therefor and release, sell or exchange such security and
otherwise deal freely with such Guarantor, all without affecting the
liabilities and obligations of the parties to this Indenture or the Holders.
SECTION 14.11. Holders Authorize Trustee to Effectuate Subordination
of Securities.
Each Holder of the Securities by his acceptance thereof authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article 14 and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of a Guarantor
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(whether in bankruptcy, insolvency or receivership proceedings, voluntary
liquidation or upon assignment for the benefit of creditors or otherwise)
tending towards liquidation of the business and assets of such Guarantor, the
timely filing of a claim for the unpaid balance, pursuant to this Guarantee,
of its or his Securities in the form required in said proceedings and cause
said claim to be approved. If the Trustee does not file a proper claim or
proof of debt in the form required in such proceeding on or prior to 30 days
before the expiration of the time to file such claim or claims, then the
holders of Senior Debt of such Guarantor have the right to file and are hereby
authorized to file an appropriate claim for and on behalf of the Holders of
said Securities.
SECTION 14.12. Right of Trustee to Hold Senior Debt of a Guarantor.
The Trustee in its individual capacity, shall be entitled to all of
the rights set forth in this Article 14 in respect of any Senior Debt of a
Guarantor at any time held by it to the same extent as any other holder of
such Senior Debt of a Guarantor, and nothing in this Indenture shall be
construed to deprive the Trustee of any of its rights as such holder.
SECTION 14.13. Trustee Not Fiduciary for Holders of Senior Debt of a
Guarantor.
With respect to the holders of Senior Debt of a Guarantor, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article 14, and no implied
covenants or obligations with respect to the holders of Senior Debt of a
Guarantor shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior Debt of
a Guarantor and the Trustee shall not be liable to any holder of Senior Debt
of a Guarantor if it shall pay over or deliver to Holders of Securities, a
Guarantor or any other person monies or assets to which any holder of Senior
Debt of such Guarantor shall be entitled by virtue of this Article 14 or
otherwise.
SECTION 14.14. Article 14 Not To Prevent Events of Default.
The failure to make a payment on account of principal or interest on
the Securities of any series by reason of any provision in this Article 14
shall not be construed as preventing the occurrence of an Event of Default
under Section 5.1.
SECTION 14.15. Execution and Delivery of Guarantee. To evidence a
Guarantee set forth in this Article 14, the Guarantor hereby agrees that the
Guarantee Notation, substantially in the form of Exhibit A hereto, shall be
endorsed on each Security authenticated and delivered by the Trustee that is
guaranteed by such Guarantee and that this Indenture shall be executed on
behalf of such Guarantor by its Chairman of the Board, its President or one of
its Vice Presidents under a facsimile of its seal reproduced thereon.
Each Guarantor hereby agrees that its Guarantee shall remain in full
force and effect notwithstanding any failure to endorse the Guarantee Notation
on each such Security.
If an officer whose signature is on this Indenture or on the
Securities guaranteed hereby no longer holds that office at the time the
Trustee authenticates the Security on which a notation of the Guarantee is
endorsed, such Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of each
Guarantee thereof.
SECTION 14.16. Subordination of Indebtedness Owed by the Company to
a Guarantor.
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Any indebtedness owed by the Company to a Guarantor shall be
subordinate to all obligations of the Company with respect to the Securities
and this Indenture to the same extent as the Securities are subordinated to
Senior Debt of the Company.
SECTION 14.17. Officers' Certificate.
If there occurs an event referred to in the first sentence of
Section 14.4(c) or the first sentence of Section 14.4, the applicable
Guarantor shall promptly give to the Trustee an Officers' Certificate (on
which the Trustee may conclusively rely) identifying all holders of Senior
Debt of such Guarantor and the principal amount of Senior Debt of such
Guarantor then outstanding held by each such holder and stating the reasons
why such Officers' Certificate is being delivered to the Trustee.
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HOVNANIAN ENTERPRISES, INC.
ISSUER
By__________________________
[title]
[CORPORATE SEAL]
Attest:
- --------------------------------
Secretary
[CORPORATE SEAL]
FIRST UNION NATIONAL BANK, AS TRUSTEE
By___________________________
[title]
Attest:
- --------------------------------
Trust Officer
-64-
EXHIBIT A
[FORM OF NOTATION OF SECURITY
RELATING TO GUARANTEE]
GUARANTEE
[Name of Guarantor] (hereinafter referred to as the "Guarantor",
which term includes any successor person under the Indenture (the "Indenture")
referred to in the Security upon which this notation is endorsed) (the
"Endorsed Security"), has unconditionally guaranteed (i) the due and punctual
payment of the principal of, premium, if any, and interest on the Endorsed
Security and all other Securities of the same series as the Endorsed Security
(the "Guaranteed Securities"), whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal
of, premium, if any, and interest, if any, on the Guaranteed Securities, to
the extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders of Guaranteed Securities or the
Trustee all in accordance with the terms set forth in Article 14 of the
Indenture and (ii) in case of any extension of time of payment or renewal of
any Guaranteed Securities or any of such other obligations, that the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture.
The obligations of the Guarantor to the Holders of Guaranteed
Securities and to the Trustee pursuant to the Guarantee evidenced hereby and
the Indenture are expressly set forth in Article 14 of the Indenture and
reference is hereby made to such Indenture for the terms of such Guarantee.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any personal liability under
the Guarantee evidenced hereby by reason of his or its status as such
stockholder, officer, director or incorporator.
The Guarantee evidenced hereby shall not be valid or obligatory for
any purpose until the certificate of authentication of the Guaranteed
Securities shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
Guarantor
[SEAL]
[NAME OF GUARANTOR]
By________________________________
By_________________________________
EXHIBIT B
[SUBSIDIARY GUARANTORS]
EXHIBIT 4.5
==============================================================================
HOVNANIAN ENTERPRISES, INC.
Issuer
and
SUBSIDIARY GUARANTORS OF HOVNANIAN
Guarantors
and
FIRST UNION NATIONAL BANK,
as Trustee
----------------------------
INDENTURE
Dated as of ___________ ___, 2001
FORM OF SUBORDINATED INDENTURE
==============================================================================
CROSS REFERENCE SHEET*
-----------
Provisions of Trust Indenture Act of 1939 and Indenture to be dated
as of _____ among HOVNANIAN ENTERPRISES, INC., SUBSIDIARY GUARANTORS OF
HOVNANIAN and FIRST UNION NATIONAL BANK, as Trustee:
Section of the Act Section of Indenture
- ------------------ --------------------
310(a)(1), (2) and (5) 6.9
310(a)(3) and (4) Inapplicable
310(b) 6.8 and 6.10(a), (b) and (d)
310(c) Inapplicable
311(a) 6.13
311(b) 6.13
311(c) Inapplicable
312(a) 4.1 and 4.2(a)
312(b) 4.2(a) and (b)(i) and (ii)
312(c) 4.2(c)
313(a) 4.4(a)(i), (ii), (iii), (iv),
(v), (vi) and (vii)
313(a)(5) Inapplicable
313(b)(1) Inapplicable
313(b)(2) 4.4(b)
313(c) 4.4(c)
313(d) 4.4(d)
314(a) 4.3
314(b) Inapplicable
314(c)(1) and (2) 11.5
314(c)(3) Inapplicable
314(d) Inapplicable
314(e) 11.5
314(f) Inapplicable
315(a), (c) and (d) 6.1
315(b) 5.8
315(e) 5.9
316(a)(1) 5.7
316(a)(2) Not required
316(a)(last sentence) 7.4
316(b) 5.4
317(a) 5.2
317(b) 3.5(a)
318(a) 11.7
- ---------------------
* This Cross Reference Sheet is not part of the Indenture.
Table of Contents
ARTICLE ONE DEFINITIONS.......................................................1
ARTICLE TWO SECURITIES........................................................8
SECTION 2.1. Forms Generally.............................................8
SECTION 2.2. Form of Trustee's Certificate of Authentication.............8
SECTION 2.3. Amount Unlimited Issuable in Series.........................9
SECTION 2.4. Authentication and Delivery of Securities..................12
SECTION 2.5. Execution of Securities....................................14
SECTION 2.6. Certificate of Authentication..............................15
SECTION 2.7. Denomination and Date of Securities;
Payments of Interest.....................................15
SECTION 2.8. Registration, Transfer and Exchange........................16
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and
Stolen Securities........................................18
SECTION 2.10. Cancellation of Securities; Disposition Thereof............19
SECTION 2.11. Temporary Securities.......................................19
SECTION 2.12. CUSIP Numbers..............................................20
ARTICLE THREE COVENANTS......................................................20
SECTION 3.1. Payment of Principal and Interest..........................20
SECTION 3.2. Offices for Notices and Payments, etc......................20
SECTION 3.3. No Interest Extension......................................20
SECTION 3.4. Appointments to Fill Vacancies in Trustee's Office.........20
SECTION 3.5. Provision as to Paying Agent...............................20
ARTICLE FOUR SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE..........................................21
SECTION 4.1. Issuer to Furnish Trustee Information as to
Names and Addresses of Securityholders...................21
SECTION 4.2. Preservation and Disclosure of Securityholders Lists.......22
SECTION 4.3. Reports by the Issuer. The Issuer covenants:..............23
SECTION 4.4. Reports by the Trustee.....................................24
ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITY HOLDERS
ON EVENT OF DEFAULT.............................................24
SECTION 5.1. Events of Default..........................................24
SECTION 5.2. Payment of Securities on Default; Suit Therefor............26
SECTION 5.3. Application of Moneys Collected by Trustee.................28
SECTION 5.4. Proceedings by Securityholders.............................29
SECTION 5.5. Proceedings by Trustee.....................................29
SECTION 5.6. Remedies Cumulative and Continuing.........................29
SECTION 5.7. Direction of Proceedings; Waiver of Defaults
by Majority of Securityholders...........................30
SECTION 5.8. Notice of Defaults.........................................30
i
SECTION 5.9. Undertaking to Pay Costs...................................30
ARTICLE SIX CONCERNING THE TRUSTEE...........................................31
SECTION 6.1. Duties and Responsibilities of the Trustee;
During Default; Prior to Default.........................31
SECTION 6.2. Certain Rights of the Trustee..............................32
SECTION 6.3. Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof 33
SECTION 6.4. Trustee and Agents May Hold Securities; Collections, etc...33
SECTION 6.5. Moneys Held by Trustee.....................................33
SECTION 6.6. Compensation and Indemnification of Trustee
and Its Prior Claim......................................33
SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc.....34
SECTION 6.8. Qualification of Trustee; Conflicting Interests............34
SECTION 6.9. Persons Eligible for Appointment as Trustee;
Different Trustees for Different Series..................34
SECTION 6.10. Resignation and Removal; Appointment of Successor Trustee..35
SECTION 6.11. Acceptance of Appointment by Successor Trustee.............36
SECTION 6.12. Merger, Conversion, Consolidation or
Succession to Business of Trustee........................37
SECTION 6.13. Preferential Collection of Claims Against the Issuer.......38
SECTION 6.14. Appointment of Authenticating Agent........................38
ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS.................................39
SECTION 7.1. Evidence of Action Taken by Securityholders................39
SECTION 7.2. Proof of Execution of Instruments and
of Holding of Securities.................................39
SECTION 7.3. Holders to be Treated as Owners............................39
SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding..........39
SECTION 7.5. Right of Revocation of Action Taken........................40
SECTION 7.6. Record Date for Consents and Waivers.......................40
ARTICLE EIGHT SUPPLEMENTAL INDENTURES........................................41
SECTION 8.1. Supplemental Indentures Without
Consent of Securityholders...............................41
SECTION 8.2. Supplemental Indentures with Consent of
Securityholders..........................................43
SECTION 8.3. Effect of Supplemental Indenture...........................44
SECTION 8.4. Documents to Be Given to Trustee...........................44
SECTION 8.5. Notation on Securities in Respect of
Supplemental Indentures..................................44
ARTICLE NINE CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE
OR OTHER DISPOSITION............................................44
SECTION 9.1. Consolidate Permitted, etc., on Certain Terms..............44
SECTION 9.2. Successor Corporation to be Substituted....................45
SECTION 9.3. Opinion of Counsel to be Given Trustee.....................46
ARTICLE TEN LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................46
ii
SECTION 10.1. Applicability of Article..................................46
SECTION 10.2. Legal Defeasance And Discharge............................46
SECTION 10.3. Covenant Defeasance.......................................46
SECTION 10.4. Conditions To Legal Or Covenant Defeasance................47
SECTION 10.5. Deposited Money And Government Securities To Be
Held In Trust; Other Miscellaneous Provisions...........48
SECTION 10.6. Repayment To Issuer.......................................48
SECTION 10.7. Reinstatement.............................................49
SECTION 10.8. Survival..................................................49
SECTION 10.9. Satisfaction and Discharge of Indenture...................49
ARTICLE ELEVEN MISCELLANEOUS PROVISIONS......................................49
SECTION 11.1. Partners, Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability....49
SECTION 11.2. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities.......................50
SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture.......50
SECTION 11.4. Notices and Demands on Issuer, Trustee and
Holders of Securities...................................50
SECTION 11.5. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein......................51
SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays...........52
SECTION 11.7. Conflict of Any Provision of Indenture
with Trust Indenture Act of 1939........................52
SECTION 11.8. GOVERNING LAW.............................................52
SECTION 11.9. Counterparts..............................................52
SECTION 11.10. Effect of Headings........................................52
ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS....................52
SECTION 12.1. Applicability of Article..................................52
SECTION 12.2. Notice of Redemption; Partial Redemptions.................52
SECTION 12.3. Payment of Securities Called for Redemption...............53
SECTION 12.4. Exclusion of Certain Securities from Eligibility
for Selection for Redemption............................54
SECTION 12.5. Mandatory and Optional Sinking Funds......................54
ARTICLE THIRTEEN SUBORDINATION...............................................56
SECTION 13.1. Securities Subordinated to Senior Indebtedness............56
SECTION 13.2. Reliance on Certificate of Liquidating Agent;
Further Evidence as to Ownership of
Senior Indebtedness.....................................59
SECTION 13.3. Payment Permitted If No Default...........................60
SECTION 13.4. Disputes with Holders of Certain Senior Indebtedness......60
SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition.........60
SECTION 13.6. Trustee to Effectuate Subordination.......................61
SECTION 13.7. Rights of Trustee as Holder of Senior Indebtedness........61
SECTION 13.8. Article Applicable to Paying Agents.......................61
iii
SECTION 13.9. Subordination Rights Not Impaired by Acts or Omissions
of the Issuer or Holders of Senior Indebtedness.........61
SECTION 13.10. Trustee Not Fiduciary for Holders of
Senior Indebtedness.....................................61
ARTICLE FOURTEEN SUBORDINATED GUARANTEE......................................62
SECTION 14.1. Applicability of Article..................................62
SECTION 14.2. Guarantee.................................................62
SECTION 14.3. Guarantee Subordinated to Senior Debt of the Guarantor....63
SECTION 14.4. Guarantors Not to Make Payments With Respect to
Securities in Certain Circumstances.....................65
SECTION 14.5. Guarantee Subordinated to Prior Payment of All Senior
Debt of a Guarantor on Dissolution, Winding Up,
Liquidation or Reorganization of the Guarantor..........66
SECTION 14.6. Holders to be Subrogated to Rights of Holders of
Senior Debt of each Guarantor...........................68
SECTION 14.7. Obligations of Each Guarantor Unconditional...............68
SECTION 14.8. Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice....................................69
SECTION 14.9. Application by Trustee of Monies Deposited with It........69
SECTION 14.10. Subordination Rights Not Impaired by Acts or Omissions
of a Guarantor or Holders of Senior Debt of such
Guarantor...............................................70
SECTION 14.11. Holders Authorize Trustee to Effectuate
Subordination of Securities.............................70
SECTION 14.12. Right of Trustee to Hold Senior Debt of a Guarantor.......70
SECTION 14.13. Trustee Not Fiduciary for Holders of Senior Debt
of a Guarantor..........................................71
SECTION 14.14. Article 14 Not To Prevent Events of Default...............71
SECTION 14.15. Execution and Delivery of Guarantee.......................71
SECTION 14.16. Subordination of Indebtedness Owed by the
Company to a Guarantor..................................71
SECTION 14.17. Officers' Certificate.....................................71
iv
FORM OF SUBORDINATED INDENTURE
SUBORDINATED INDENTURE, dated as of ____ ___, 2001 among Hovnanian
Enterprises, Inc., a Delaware corporation (the "Issuer" or "Hovnanian"),
Subsidiary Guarantors of Hovnanian and FIRST UNION NATIONAL BANK, as trustee
(the "Trustee").
RECITALS OF THE ISSUER:
-------- -- --- ------
WHEREAS, the Issuer has duly authorized the issuance from time to
time of its unsecured subordinated debentures, notes or other evidences of
indebtedness to be issued in one or more series (the "Securities") up to such
principal amount or amounts as may from time to time be authorized in
accordance with the terms of this Indenture; and
WHEREAS, the Issuer has duly authorized the execution and delivery of
this Indenture to provide, among other things, for the authentication,
delivery and administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been undertaken and
completed.
RECITALS OF GUARANTORS:
-------- -- ----------
WHEREAS, each Guarantor desires to make the Guarantees provided for
herein; and
WHEREAS, all things necessary to make this Indenture a valid
agreement of each of the Guarantors, in accordance with its terms, have been
done and the Guarantor will do all things necessary to make the Guarantees,
when executed by each of the Guarantors and endorsed on the Securities
authenticated and delivered hereunder, the valid obligations of each Guarantor
as hereinafter provided.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows:
ARTICLE ONE
DEFINITIONS
For all purposes of this Indenture and of any indenture supplemental
hereto the following terms shall have the respective meanings specified in
this Section 1.1 (except as otherwise expressly provided herein or in any
indenture supplemental hereto or unless the context otherwise clearly
requires). All other terms used in this Indenture that are defined in the
Trust Indenture Act of 1939, including terms defined therein by reference to
the Securities Act of 1933, as amended (the "Securities Act"), shall have the
meanings assigned to such terms in said Trust Indenture Act of 1939 and in the
Securities Act as in force at the date of this Indenture (except as otherwise
expressly provided herein or in any indenture supplemental hereto or unless
the context otherwise clearly requires).
1
All accounting terms used herein and not expressly defined shall have
the meanings assigned to such terms in accordance with generally accepted
accounting principles, and the term "generally accepted accounting principles"
means such accounting principles as are generally accepted on the date of this
Indenture.
The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. The expressions "date of this
Indenture", "date hereof", "date as of which this Indenture is dated" and
"date of execution and delivery of this Indenture" and other expressions of
similar import refer to the effective date of the original execution and
delivery of this Indenture, viz. as of _____________________.
The terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" shall have the meaning set forth in Section
6.14.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 United
Stated Code " 101 et seq., or any successor statute thereto.
"Board of Directors" means the board of directors of the Issuer or
any duly authorized committee of that board or any director or directors
and/or officer or officers to whom that board or committee shall have duly
delegated its authority.
"Board Resolution" means (1) one or more resolutions, certified by
the secretary or an assistant secretary of the Issuer to have been duly
adopted or consented to by the Board of Directors of the Issuer and to be in
full force and effect, or (2) a certificate signed by the director or
directors and/or officer or officers to whom the Board of Directors or any
duly authorized committee of that Board shall have duly delegated its
authority, in each case delivered to the Trustee for the Securities of any
series.
"Business Day" means, with respect to any Security, unless otherwise
specified in a Board Resolution and an Officers' Certificate with respect to a
particular series of Securities, a day that (a) in the Place of Payment (or in
any of the Places of Payment, if more than one) in which amounts are payable,
as specified in the form of such Security, and (b) in the city in which the
Corporate Trust Office is located, is not a day on which banking institutions
are authorized or required by law or regulation to close.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
as amended, or, if at any time after the execution and delivery of this
Indenture such Commission is not existing and
2
performing the duties now assigned to it under the Trust Indenture Act of
1939, then the body performing such duties on such date.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets included on the most recent consolidated balance sheet of the Issuer
and its Restricted Subsidiaries, less applicable reserves and other properly
deductible items and after deducting therefrom (a) all current liabilities and
(b) all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles, all in accordance with generally
accepted accounting principles consistently applied.
"Corporate Trust Office" means the office of the Trustee of a series
of Securities at which the trust created by this Indenture shall, at any
particular time, be principally administered, which office is, at the date as
of which this Indenture is dated, located at [address].
"Covenant Defeasance" has the meaning set forth in Section 10.3.
"Depositary" means, with respect to the Securities of any series
issuable or issued in the form of one or more Global Securities, the Person
designated as Depositary by the Issuer pursuant to Section 2.3 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or
include each Person who is then a Depositary hereunder, and, if at any time
there is more than one such Person, "Depositary" as used with respect to the
Securities of any such series shall mean the Depositary with respect to the
Global Securities of such series.
"Dollars" and the sign "$" means the coin and currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
"Eligible Guarantors" means each of the entities listed on Exhibit B
hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Event of Default" means any event or condition specified as such in
Section 5.1.
"Global Security" means a Security evidencing all or a part of a
series of Securities issued to the Depositary for such series in accordance
with Section 2.3 and bearing the legend prescribed in Section 2.4.
"Guarantee" has the meaning specified in Section 14.2.
"Guarantor" has the meaning specified in Section 2.3.
"Holder", "Holder of Securities", "Securityholder" or other similar
terms mean, in the case of any Security, the Person in whose name such
Security is registered in the security register kept by the Issuer for that
purpose in accordance with the terms hereof.
"Hovnanian" means Hovnanian Enterprises, Inc., a Delaware
corporation.
3
"Indebtedness" with respect to any Person, means, without
duplication:
(a) (i) the principal of and premium, if any, and interest, if any,
on indebtedness for money borrowed of such Person, indebtedness of
such Person evidenced by bonds, notes, debentures or similar
obligations, and any guaranty by such Person of any indebtedness for
money borrowed or indebtedness evidenced by bonds, notes, debentures
or similar obligations of any other Person, whether any such
indebtedness or guaranty is outstanding on the date of this
Indenture or is thereafter created, assumed or incurred, (ii)
obligations of such Person for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit
transaction; (iii) the principal of and premium, if any, and
interest, if any, on indebtedness incurred, assumed or guaranteed by
such Person in connection with the acquisition by it or any of its
subsidiaries of any other businesses, properties or other assets;
(iv) lease obligations which such Person capitalized in accordance
with Statement of Financial Accounting Standards No. 13 promulgated
by the Financial Accounting Standards Board or such other generally
accepted accounting principles as may be from time to time in
effect; (v) any indebtedness of such Person representing the balance
deferred and unpaid of the purchase price of any property or
interest therein (except any such balance that constitutes an
accrued expense or trade payable) and any guaranty, endorsement or
other contingent obligation of such Person in respect of any
indebtedness of another that is outstanding on the date of this
Indenture or is thereafter created, assumed or incurred by such
Person; and (vi) obligations of such Person under interest rate,
commodity or currency swaps, caps, collars, options and similar
arrangements; and
(b) any amendments, modifications, refundings, renewals or
extensions of any indebtedness or obligation described as
Indebtedness in clause (a) above.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, including, for all purposes of this instrument and any
such supplement, the provisions of the Trust Indenture Act of 1939 that are
deemed to be a part of and govern this instrument and any such supplement,
respectively, and shall include the forms and terms of particular series of
Securities established as contemplated hereunder.
"interest" means, when used with respect to non-interest bearing
Securities (including, without limitation, any Original Issue Discount
Security that by its terms bears interest only after maturity or upon default
in any other payment due on such Security), interest payable after maturity
(whether at stated maturity, upon acceleration or redemption or otherwise) or
after the date, if any, on which the Issuer becomes obligated to acquire a
Security, whether upon conversion, by purchase or otherwise.
"Issuer" means Hovnanian Enterprises, Inc., a New Jersey corporation,
and, subject to Article Nine, its successors and assigns.
4
"Issuer Order" means a written statement, request or order of the
Issuer which is signed in its name by the chairman of the Board of Directors,
the president or any vice president of the Issuer, and delivered to the
Trustee.
"Legal Defeasance" has the meaning specified in Section 10.2.
"Officers' Certificate", means a certificate signed by the chairman
of the Board of Directors, the president, or any vice president and by the
treasurer, any assistant treasurer, the controller, any assistant controller,
the secretary or any assistant secretary of the Issuer. Each such certificate
shall include the statements provided for in Section 11.5 if and to the extent
required by the provisions of such Section 11.5. One of the officers signing
an Officers' Certificate given pursuant to Section 4.3 shall be the principal
executive, financial or accounting officer of the Issuer.
"Opinion of Counsel" means an opinion in writing signed by the chief
counsel of the Issuer or by such other legal counsel who may be an employee of
or counsel to the Issuer and who shall be reasonably satisfactory to the
Trustee. Each such opinion shall include the statements provided for in
Section 11.5, if and to the extent required by the provisions of such Section
11.5.
"original issue date" of any Security (or portion thereof) means the
earlier of (a) the date of such Security or (b) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly)
on registration of transfer, exchange or substitution.
"original issue discount" of any debt security, including any
Original Issue Discount Security, means the difference between the principal
amount of such debt security and the initial issue price of such debt security
(as set forth in the case of an Original Issue Discount Security on the face
of such Security).
"Original Issue Discount Security" means any Security that provides
for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the maturity thereof pursuant to Article
Five.
"Outstanding" when used with reference to Securities, shall, subject
to the provisions of Section 7.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(b) Securities (other than Securities of any series as to which the
provisions of Article Ten hereof shall not be applicable), or portions
thereof, for the payment or redemption of which moneys or U.S. Government
Obligations (as provided for in Section 10.1) in the necessary amount
shall have been deposited in trust with the Trustee or with any paying
agent (other than the Issuer) or shall have been set aside, segregated
and held in trust by the Issuer for the Holders of such Securities (if
the Issuer shall act as its own paying agent), provided that, if such
Securities, or portions thereof, are to be redeemed prior to the maturity
thereof, notice of such redemption shall have been given as herein
5
provided, or provision satisfactory to the Trustee shall have been made
for giving such notice; and
(c) Securities which shall have been paid or in substitution for
which other Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.9 (except with respect to any such
Security as to which proof satisfactory to the Trustee is presented that
such Security is held by a Person in whose hands such Security is a
legal, valid and binding obligation of the Issuer).
In determining whether the Holders of the requisite aggregate
principal amount of Outstanding Securities of any or all series have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding for such purposes shall be the portion of
the principal amount thereof that would be due and payable as of the date of
such determination (as certified by the Issuer to the Trustee) upon a
declaration of acceleration of the maturity thereof pursuant to Article Five.
"Periodic Offering" means an offering of Securities of a series from
time to time, the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the stated
maturity or maturities thereof and the redemption provisions, if any, with
respect thereto, are to be determined by the Issuer or its agents upon the
issuance of such Securities.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and interest, if any,
on the Securities of such series are payable as determined in accordance with
Section 2.3.
"principal" of a debt security, including any Security, means the
amount (including, without limitation, if and to the extent applicable, any
premium and, in the case of an Original Issue Discount Security, any accrued
original issue discount, but excluding interest) that is payable with respect
to such debt security as of any date and for any purpose (including, without
limitation, in connection with any sinking fund, if any, upon any redemption
at the option of the Issuer, upon any purchase or exchange at the option of
the Issuer or the holder of such debt security and upon any acceleration of
the maturity of such debt security).
"principal amount" of a debt security, including any Security, means
the principal amount as set forth on the face of such debt security.
"record date" shall have the meaning set forth in Section 2.7.
"Responsible Officer", when used with respect to the Trustee of a
series of Securities, means any officer of the Trustee with direct
responsibility for the administration of the trust created by this Indenture.
6
"Restricted Subsidiary" means (a) any Subsidiary of the Issuer other
than an Unrestricted Subsidiary, and (b) any Subsidiary of the Issuer which
was an Unrestricted Subsidiary but which, subsequent to the date hereof, is
designated by the Issuer (by Board Resolution) to be a Restricted Subsidiary;
provided, however, that the Issuer may not designate any such Subsidiary to be
a Restricted Subsidiary if the Issuer would thereby breach any covenant or
agreement herein contained (on the assumptions that any outstanding
Indebtedness of such Subsidiary was incurred at the time of such designation).
"Securities Act" shall have the meaning set forth in Section 1.1.
"Security" or "Securities"has the meaning stated in the first recital
of this Indenture and more particularly means any Securities authenticated and
delivered under this Indenture; provided, however that if at any time there is
more than one Person acting as Trustee under this Instrument, "Securities"
with respect to the Indenture as to which such Person is Trustee shall have
the meaning stated in the first recital of this instrument and shall more
particularly mean Securities authenticated and delivered under this
instrument, exclusive, however, of Securities of any series as to which such
Person is not Trustee.
"Senior Indebtedness" means Indebtedness of the Issuer outstanding at
any time (other than the Indebtedness evidenced by the Securities of any
series) except (a) any Indebtedness as to which, by the terms of the
instrument creating or evidencing such Indebtedness, it is provided that such
Indebtedness is not senior or prior in right of payment to the Securities or
is pari passu or subordinate by its terms in right of payment to the
Securities, (b) renewals, extensions and modifications of any such
Indebtedness, (c) any Indebtedness of the Issuer to a wholly-owned Subsidiary
of the Issuer, (d) interest accruing after the filing of a petition initiating
any proceeding referred to in Sections 5.1(e) and 5.1(f) unless such interest
is an allowed claim enforceable against the Issuer in a proceeding under
federal or state bankruptcy laws and (e) trade payables.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Issuer within the meaning of Rule 1.02(w) of Regulation S-X
promulgated by the Commission as in effect on the date of this Indenture.
"Subsidiary" of any specified Person means any corporation of which
such Person, or such Person and one or more Subsidiaries of such Person, or
any one or more Subsidiaries of such Person, directly or indirectly own voting
securities entitling any one or more of such Persons and its Subsidiaries to
elect a majority of the directors, either at all times or, so long as there is
no default or contingency which permits the holders of any other class or
classes of securities to vote for the election of one or more directors.
"Trust Indenture Act of 1939" (except as otherwise provided in
Sections 8.1 and 8.2) means the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990, as in force at the date as of which this
Indenture is originally executed.
"Trustee" means the Person identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Six, shall also
include any successor trustee. "Trustee" shall also mean or include each
Person who is then a trustee hereunder and, if at any time there is
7
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the trustee with respect to the Securities of such
series.
"Unrestricted Subsidiary" means (a) any Subsidiary of the Issuer
acquired or organized after the date hereof, provided, however, that such
Subsidiary of the Issuer shall not be a successor, directly or indirectly, to
any Restricted Subsidiary, and (b) any Subsidiary of the Issuer substantially
all the assets of which consist of stock or other securities of a Subsidiary
or Subsidiaries of the Issuer of the character described in clause (a) of this
paragraph, unless and until such Subsidiary shall have been designated to be a
Restricted Subsidiary pursuant to clause (b) of the definition of "Restricted
Subsidiary".
"U.S. Government Obligations" shall have the meaning set forth in
Section 10.1(B).
"vice president," when used with respect to the Issuer or the
Trustee, means any vice president, regardless of whether designated by a
number or a word or words added before or after the title "vice president."
"Yield to Maturity" means the yield to maturity on a series of
Securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with generally accepted financial practice or as
otherwise provided in the terms of such series of Securities.
ARTICLE TWO
SECURITIES
SECTION 2.1. Forms Generally. The Securities of each series shall be
substantially in such form (not inconsistent with this Indenture) as shall be
established by or pursuant to one or more Board Resolutions (as set forth in a
Board Resolution or, to the extent established pursuant to rather than set
forth in a Board Resolution, an Officers' Certificate detailing such
establishment) or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have
imprinted or otherwise reproduced thereon such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may
be required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities as evidenced by their
execution of such Securities.
SECTION 2.2. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be
substantially as follows:
This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
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________________________, as Trustee
By_______________________________
Authorized Signatory
If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Securities of such series shall
bear, in addition to the Trustee's certificate of authentication, an alternate
Certificate of Authentication which shall be substantially as follows:
This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
________________________, as Trustee
By_______________________________
Authorized Signatory
________________________, as Trustee
By_______________________________
Authorized Signatory
SECTION 2.3. Amount Unlimited Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series and the Securities
of each such series shall rank equally and pari passu with the Securities of
each other series, but all Securities issued hereunder shall be subordinate
and junior in right of payment, to the extent and in the manner set forth in
Article Thirteen, to all Senior Indebtedness of the Issuer. There shall be
established in or pursuant to one or more Board Resolutions (and, to the
extent established pursuant to rather than set forth in a Board Resolution, in
an Officers' Certificate detailing such establishment) or established in one
or more indentures supplemental hereto, prior to the initial issuance of
Securities of any series:
(1) the designation of the Securities of the series, which shall
distinguish the Securities of such series from the Securities of all
other series;
(2) any limit upon the aggregate principal amount of the Securities
of the series that may be authenticated and delivered under this
Indenture (except for Securities
9
authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of the series pursuant to
Section 2.8, 2.9, 2.11, 8.5 or 12.3);
(3) the date or dates on which the principal of the Securities of
the series is payable;
(4) the rate or rates at which the Securities of the series shall
bear interest, if any, the date or dates from which any such interest
shall accrue, on which any such interest shall be payable and on which a
record shall be taken for the determination of Holders to whom any such
interest is payable or the method by which such rate or rates or date or
dates shall be determined or both;
(5) the place or places where and the manner in which the principal
of, premium, if any, and interest, if any, on Securities of the series
shall be payable (if other than as provided in Section 3.2) and the
office or agency for the Securities of the series maintained by the
Issuer pursuant to Section 3.2;
(6) the right, if any, of the Issuer to redeem, purchase or repay
Securities of the series, in whole or in part, at its option and the
period or periods within which, the price or prices (or the method by
which such price or prices shall be determined or both) at which, the
form or method of payment therefor if other than in cash and any terms
and conditions upon which and the manner in which (if different from the
provisions of Article Twelve) Securities of the series may be so
redeemed, purchased or repaid, in whole or in part pursuant to any
sinking fund or otherwise;
(7) the obligation, if any, of the Issuer to redeem, purchase or
repay Securities of the series in whole or in part pursuant to any
mandatory redemption, sinking fund or analogous provisions or at the
option of a Holder thereof and the period or periods within which the
price or prices (or the method by which such price or prices shall be
determined or both) at which, the form or method of payment therefor if
other than in cash and any terms and conditions upon which and the manner
in which (if different from the provisions of Article Twelve) Securities
of the series shall be redeemed, purchased or repaid, in whole or in
part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(9) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
acceleration of the maturity thereof;
(10) whether Securities of the series will be issuable as Global
Securities;
(11) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions, the
form and terms of such certificates, documents or conditions;
10
(12) any trustees, depositaries, authenticating or paying agents,
transfer agents or registrars or any other agents with respect to the
Securities of such series;
(13) any deleted, modified or additional events of default or
remedies or any deleted, modified or additional covenants with respect to
the Securities of such series;
(14) whether the provisions of Article Ten will not be applicable to
Securities of such series;
(15) any provision relating to the issuance of Securities of such
series at an original issue discount (including, without limitation, the
issue price thereof, the rate or rates at which such original issue
discount shall accrete, if any, and the date or dates from or to which or
period or periods during which such original issue discount shall accrete
at such rate or rates);
(16) if other than Dollars, the foreign currency in which payment of
the principal of, premium, if any, and interest, if any, on the
Securities of such series shall be payable;
(17) if other than First Union National Bank is to act as Trustee
for the Securities of such series, the name and Corporate Trust Office of
such Trustee;
(18) if the amounts of payments of principal of, premium, if any,
and interest, if any, on the Securities of such series are to be
determined with reference to an index, the manner in which such amounts
shall be determined;
(19) the terms for conversion or exchange, if any, with respect to
the Securities of such series;
(20) which, if any, of the Eligible Guarantors, shall guarantee the
Securities on the terms set forth in Article Fourteen (each of the other
Eligible Guarantors that guarantee the Securities set forth in Article
Fourteen, if any, a "Guarantor"); and
(21) any other terms of the series.
All Securities of any one series shall be substantially identical,
except as to denomination and except as may otherwise be provided by or
pursuant to the Board Resolution or Officers' Certificate referred to above or
as set forth in any such indenture supplemental hereto. All Securities of any
one series need not be issued at the same time and may be issued from time to
time, consistent with the terms of this Indenture, if so provided by or
pursuant to such Board Resolution, such Officers' Certificate or in any such
indenture supplemental hereto.
Any such Board Resolution or Officers' Certificate referred to above
with respect to Securities of any series filed with the Trustee on or before
the initial issuance of the Securities of such series shall be incorporated
herein by reference with respect to Securities of such series and shall
thereafter be deemed to be a part of the Indenture for all purposes relating
to Securities of such series as fully as if such Board Resolution or Officers'
Certificate were set forth herein in full.
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SECTION 2.4. Authentication and Delivery of Securities. The Issuer
may deliver Securities of any series executed by the Issuer to the Trustee for
authentication together with the applicable documents referred to below in
this Section 2.4, and the Trustee shall thereupon authenticate and deliver
such Securities to, or upon the order of the Issuer (contained in the Issuer
Order referred to below in this Section 2.4) or pursuant to such procedures
acceptable to the Trustee and to such recipients as may be specified from time
to time by an Issuer Order. The maturity date, original issue date, interest
rate, if any, and any other terms of the Securities of such series shall be
determined by or pursuant to such Issuer Order and procedures. If provided for
in such procedures and agreed to by the Trustee, such Issuer Order may
authorize authentication and delivery pursuant to oral instructions from the
Issuer or its duly authorized agent, which instructions shall be promptly
confirmed in writing. In authenticating the Securities of such series and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive (in the case of
subparagraphs (2), (3) and (4) below only at or before the time of the first
request of the Issuer to the Trustee to authenticate Securities of such
series) and (subject to Section 6.1) shall be fully protected in relying upon,
unless and until such documents have been superseded or revoked:
(1) an Issuer Order requesting such authentication and setting forth
delivery instructions provided that, with respect to Securities of a
series subject to a Periodic Offering, (a) such Issuer Order may be
delivered by the Issuer to the Trustee prior to the delivery to the
Trustee of such Securities for authentication and delivery, (b) the
Trustee shall authenticate and deliver Securities of such series for
original issue from time to time, in an aggregate principal amount not
exceeding the aggregate principal amount established for such series,
pursuant to an Issuer Order or pursuant to procedures acceptable to the
Trustee as may be specified from time to time by an Issuer Order, (c) the
maturity date or dates, original issue date or dates, interest rate or
rates, if any, and any other terms of Securities of such series shall be
determined by an Issuer Order or pursuant to such procedures, (d) if
provided for in such procedures, such Issuer Order may authorize
authentication and delivery pursuant to oral or electronic instructions
from the Issuer or its duly authorized agent or agents, which oral
instructions shall be promptly confirmed in writing and (e) after the
original issuance of the first Security of such series to be issued, any
separate request by the Issuer that the Trustee authenticate Securities
of such series for original issuance will be deemed to be a certification
by the Issuer that it is in compliance with all conditions precedent
provided for in this Indenture relating to the authentication and
delivery of such Securities;
(2) the Board Resolution, Officers' Certificate or executed
supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant
to which the forms and terms of the Securities of such series were
established;
(3) an Officers' Certificate setting forth the form or forms and
terms of the Securities stating that the form or forms and terms of the
Securities have been established pursuant to Sections 2.1 and 2.3 and
comply with this Indenture and covering such other matters as the Trustee
may reasonably request; and
12
(4) at the option of the Issuer, either an Opinion of Counsel, or a
letter from legal counsel addressed to the Trustee permitting it to rely
on an Opinion of Counsel, substantially to the effect that:
(a) the form or forms of the Securities of such series have been
duly authorized and established in conformity with the provisions of this
Indenture;
(b) in the case of an underwritten offering, the terms of the
Securities of such series have been duly authorized and established in
conformity with the provisions of this Indenture, and, in the case of an
offering that is not underwritten, certain terms of the Securities of
such series have been established pursuant to a Board Resolution, an
Officers' Certificate or a supplemental indenture in accordance with this
Indenture, and when such other terms as are to be established pursuant to
procedures set forth in an Issuer Order shall have been established, all
such terms will have been duly authorized by the Issuer and will have
been established in conformity with the provisions of this Indenture;
(c) when the Securities of such series have been executed by the
Issuer and the Securities of such series have been authenticated by the
Trustee in accordance with the provisions of this Indenture and delivered
to and duly paid for by the purchasers thereof, they will have been duly
issued under this Indenture and will be valid and legally binding
obligations of the Issuer, enforceable in accordance with their
respective terms, and will be entitled to the benefits of this Indenture;
and
(d) the execution and delivery by the Issuer of, and the performance
by the Issuer of its obligations under, the Securities of such series
will not contravene any provision of applicable law or the articles of
incorporation or bylaws of the Issuer or any agreement or other
instrument binding upon the Issuer or any of its Subsidiaries that is
material to the Issuer and its Subsidiaries, considered as one
enterprise, or, to such counsel's knowledge after the inquiry indicated
therein (which shall be reasonable), any judgment, order or decree of any
governmental agency or any court having jurisdiction over the Issuer or
any Subsidiary of the Issuer, and no consent, approval or authorization
of any governmental body or agency is required for the performance by the
Issuer of its obligations under the Securities, except such as are
specified and have been obtained and such as may be required by the
securities or blue sky laws of the various states in connection with the
offer and sale of the Securities.
In addition, if the authentication and delivery relates to a new
series of Securities created by an indenture supplemental hereto, such Opinion
of Counsel shall also state that all laws and requirements with respect to the
form and execution by the Issuer of the supplemental indenture with respect to
the series of Securities have been complied with, the Issuer has corporate
power to execute and deliver any such supplemental indenture and has taken all
necessary corporate action for those purposes and any such supplemental
indenture has been executed and delivered and constitutes the legal, valid and
binding obligation of the Issuer enforceable in accordance with its terms.
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In rendering such opinions, such counsel may qualify any opinions as
to enforceability by stating that such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium and other
similar laws affecting the rights and remedies of creditors and is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the State of New
Jersey and the federal law of the United States, upon opinions of other
counsel (copies of which shall be delivered to the Trustee), who shall be
counsel reasonably satisfactory to the Trustee, in which case the opinion
shall state that such counsel believes that both such counsel and the Trustee
are entitled so to rely. Such counsel may also state that, insofar as such
opinion involves factual matters, such counsel has relied, to the extent such
counsel deems proper, upon certificates of officers of the Issuer and its
Subsidiaries and certificates of public officials.
The Trustee shall have the right to decline to authenticate and
deliver any Securities of any series under this Section 2.4 if the Trustee,
being advised by counsel, determines that such action may not lawfully be
taken by the Issuer, or if the Trustee in good faith by its board of directors
or board of trustees, executive committee or a trust committee of directors or
trustees or Responsible Officers shall determine that such action would expose
the Trustee to personal liability to existing Holders or would adversely
affect the Trustee's own rights, duties or immunities under the Securities,
this Indenture or otherwise.
If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Global
Securities, then the Issuer shall execute and the Trustee shall, in accordance
with this Section 2.4 and the Issuer Order with respect to such series,
authenticate and deliver one or more Global Securities that (i) shall
represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series to be issued in the
form of Global Securities and not yet cancelled, (ii) shall be registered in
the name of the Depositary for such Global Security or Securities or the
nominee of such Depositary, (iii) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions, and (iv) shall bear
a legend substantially to the following effect: "Unless and until it is
exchanged in whole or in part for Securities in definitive registered form,
this Security may not be transferred except as a whole by the Depositary to
the 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."
Each Depositary designated pursuant to Section 2.3 must, at the time
of its designation and at all times while it serves as Depositary, be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and any other applicable statute or regulation.
Reference is made to Section 14.15 concerning execution and delivery
of the Guarantees.
SECTION 2.5. Execution of Securities. The Securities shall be signed
on behalf of the Issuer by the chairman of the Board of Directors, the
president, any vice president or the treasurer of the Issuer, under its
corporate seal which may, but need not, be attested by its secretary or one of
its assistant secretaries. Such signatures may be the manual or facsimile
14
signatures of the present or any future such officers. The seal of the Issuer
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of a seal or any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall
be authenticated and delivered by the Trustee or disposed of by the Issuer,
such Security nevertheless may be authenticated and delivered or disposed of
as though the person who signed such Security had not ceased to be such
officer of the Issuer; and any Security may be signed on behalf of the Issuer
by such persons as, at the actual date of the execution of such Security,
shall be the proper officers of the Issuer, although at the date of the
execution and delivery of this Indenture any such person was not such an
officer.
Reference is made to Section 14.15 concerning execution and delivery
of the Guarantees.
SECTION 2.6. Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by the manual signature of one
of its authorized signatories, or its Authenticating Agent, shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
The execution of such certificate by the Trustee or its Authenticating Agent
upon any Security executed by the Issuer shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture. Each
reference in this Indenture to authentication by the Trustee includes
authentication by an agent appointed pursuant to Section 6.14.
Reference is made to Section 14.15 concerning execution and delivery
of the Guarantees.
SECTION 2.7. Denomination and Date of Securities; Payments of
Interest. The Securities of each series shall be issuable in registered form
in denominations established as contemplated by Section 2.3 or, with respect
to the Securities of any series, if not so established, in denominations of
$1,000 and any integral multiple thereof. The Securities of each series shall
be numbered, lettered or otherwise distinguished in such manner or in
accordance with such plan as the officers of the Issuer executing the same may
determine with the approval of the Trustee, as evidenced by the execution and
authentication thereof.
Each Security shall be dated the date of its authentication. The
Securities of each series shall bear interest, if any, from the date, and such
interest, if any, shall be payable on the dates, established as contemplated
by Section 2.3.
The Person in whose name any Security of any series is registered at
the close of business on any record date applicable to a particular series
with respect to any interest payment date for such series shall be entitled to
receive the interest, if any, payable on such interest payment date
notwithstanding any transfer or exchange of such Security subsequent to the
record
15
date and prior to such interest payment date, except if and to the extent the
Issuer shall default in the payment of the interest due on such interest
payment date for such series, in which case such defaulted interest shall be
paid to the Persons in whose names Outstanding Securities for such series are
registered (a) at the close of business on a subsequent record date (which
shall be not less than five Business Days prior to the date of payment of such
defaulted interest) established by notice given by mail by or on behalf of the
Issuer to the Holders of Securities not less than 15 days preceding such
subsequent record date or (b) as determined by such other procedure as is
mutually acceptable to the Issuer and the Trustee. The term "record date" as
used with respect to any interest payment date (except a date for payment of
defaulted interest) for the Securities of any series shall mean the date
specified as such in the terms of the Securities of such series established as
contemplated by Section 2.3, or, if no such date is so established, if such
interest payment date is the first day of a calendar month, the fifteenth day
of the next preceding calendar month or, if such interest payment date is the
fifteenth day of a calendar month, the first day of such calendar month,
whether or not such record date is a Business Day.
SECTION 2.8. Registration, Transfer and Exchange. The Issuer will
keep at each office or agency to be maintained for the purpose as provided in
Section 3.2 for each series of Securities a register or registers in which,
subject to such reasonable regulations as it may prescribe, it will provide
for the registration of Securities of each series and the registration of
transfer of Securities of such series. Each such register shall be in written
form in the English language or in any other form capable of being converted
into such form within a reasonable time. At all reasonable times such register
or registers shall be open for inspection and available for copying by the
Trustee.
Upon due presentation for registration of transfer of any Security of
any series at any such office or agency to be maintained for the purpose as
provided in Section 3.2, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities of the same series, maturity date, interest rate, if
any, and original issue date in authorized denominations for a like aggregate
principal amount.
All Securities presented for registration of transfer shall (if so
required by the Issuer or the Trustee) be duly endorsed by, or be accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Issuer and the Trustee duly executed by, the Holder or his attorney duly
authorized in writing.
At the option of the Holder thereof, Securities of any series (other
than a Global Security, except as set forth below) may be exchanged for a
Security or Securities of such series having authorized denominations and an
equal aggregate principal amount, upon surrender of such Securities to be
exchanged at the agency of the Issuer that shall be maintained for such
purpose in accordance with Section 3.2.
The Issuer may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
registration of transfer of Securities. No service charge shall be made for
any such transaction or for any exchange of Securities of any series as
contemplated by the immediately preceding paragraph.
16
The Issuer shall not be required to exchange or register a transfer
of (a) any Securities of any series for a period of 15 days next preceding the
first mailing or publication of notice of redemption of Securities of such
series to be redeemed, (b) any Securities selected, called or being called for
redemption, in whole or in part, except, in the case of any Security to be
redeemed in part, the portion thereof not so to be redeemed or (c) any
Security if the Holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Security in whole or in part, except the portion of
such Security not required to be repurchased.
Notwithstanding any other provision of this Section 2.8, unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, a Global Security representing all or a part of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series
or a nominee of such successor Depositary.
If at any time the Depositary for any Securities of a series
represented by one or more Global Securities notifies the Issuer that it is
unwilling or unable to continue as Depositary for such Securities or if at any
time the Depositary for such Securities shall no longer be eligible under
Section 2.4, the Issuer shall appoint a successor Depositary with respect to
such Securities. If a successor Depositary for such Securities is not
appointed by the Issuer within 90 days after the Issuer receives such notice
or becomes aware of such ineligibility, the Issuer's election pursuant to
Section 2.3 that such Securities be represented by one or more Global
Securities shall no longer be effective and the Issuer shall execute, and the
Trustee, upon receipt of an Issuer Order for the authentication and delivery
of definitive Securities of such series, will authenticate and deliver
Securities of such series in definitive registered form, in any authorized
denominations, in an aggregate principal amount equal to the principal amount
of the Global Security or Securities representing such Securities in exchange
for such Global Security or Securities.
The Issuer may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global
Securities shall no longer be represented by a Global Security or Securities.
In such event, the Issuer shall execute, and the Trustee, upon receipt of an
Issuer Order for the authentication and delivery of definitive Securities of
such series, shall authenticate and deliver, Securities of such series in
definitive registered form, in any authorized denominations, in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities representing such Securities, in exchange for such Global Security
or Securities.
If specified by the Issuer pursuant to Section 2.3 with respect to
Securities represented by a Global Security, the Depositary for such Global
Security may surrender such Global Security in exchange in whole or in part
for Securities of the same series in definitive registered form on such terms
as are acceptable to the Issuer and such Depositary. Thereupon, the Issuer
shall execute, and the Trustee shall authenticate and deliver, without service
charge,
(i) to the Person specified by such Depositary, a new Security or
Securities of the same series, of any authorized denominations as
requested by such Person, in an
17
aggregate principal amount equal to and in exchange for such Person's
beneficial interest in the Global Security; and
(ii) to such Depositary a new Global Security in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of
Securities authenticated and delivered pursuant to clause (i) above.
Upon the exchange of a Global Security for Securities in definitive
registered form in authorized denominations, such Global Security shall be
cancelled by the Trustee or an agent of the Trustee. Securities in definitive
registered form issued in exchange for a Global Security pursuant to this
Section 2.8 shall be registered in such names and in such authorized
denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Trustee or the Issuer or an agent of
the Issuer. The Trustee or such agent shall deliver at its office such
Securities to or as directed by the Persons in whose names such Securities are
so registered.
All Securities issued upon any registration of transfer or exchange
of Securities shall be valid and legally binding obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall become
mutilated, defaced or be destroyed, lost or stolen, the Issuer in its
discretion may execute, and upon the written request of the Issuer, the
Trustee shall authenticate and deliver a new Security of the same series,
maturity date, interest rate, if any, and original issue date, bearing a
number or other distinguishing symbol not contemporaneously outstanding, in
exchange and substitution for the mutilated or defaced Security, or in lieu of
and in substitution for the Security so destroyed, lost or stolen. In every
case the applicant for a substitute Security shall furnish to the Issuer and
to the Trustee and any agent of the Issuer or the Trustee such security or
indemnity as may be required by the Trustee or the Issuer or any such agent to
indemnify and defend and to save each of the Trustee and the Issuer and any
such agent harmless and, in every case of destruction, loss or theft, evidence
to their satisfaction of the destruction, loss or theft of such Security and
of the ownership thereof and in the case of mutilation or defacement, shall
surrender the Security to the Trustee or such agent.
Upon the issuance of any substitute Security, the Issuer may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee or its agent) connected therewith. In case
any Security which has matured or is about to mature or has been called for
redemption in full shall become mutilated or defaced or be destroyed, lost or
stolen, the Issuer may instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the
case of a mutilated or defaced Security), if the applicant for such payment
shall furnish to the Issuer and to the Trustee and any agent of the Issuer or
the Trustee such security or indemnity as any of them may require to hold each
of them harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the
18
Issuer and the Trustee and any agent of the Issuer or the Trustee evidence to
the Trustee's satisfaction of the destruction, loss or theft of such Security
and of the ownership thereof.
Every substitute Security of any series issued pursuant to the
provisions of this Section by virtue of the fact that any such Security is
destroyed, lost or stolen shall constitute an additional contractual
obligation of the Issuer, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone and shall be entitled to
all the benefits of (but shall be subject to all the limitations of rights set
forth in) this Indenture equally and proportionately with any and all other
Securities of such series duly authenticated and delivered hereunder. All
Securities shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, defaced, destroyed, lost or stolen
Securities and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments
or other securities without their surrender.
SECTION 2.10. Cancellation of Securities; Disposition Thereof. All
Securities surrendered for payment, redemption, registration of transfer or
exchange, or for credit against any payment in respect of a sinking or
analogous fund, if surrendered to the Issuer or any agent of the Issuer or the
Trustee or any agent of the Trustee, shall be delivered to the Trustee or its
agent for cancellation or, if surrendered to the Trustee, shall be cancelled
by it; and no Securities shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture. The Trustee shall
dispose of all cancelled Securities in accordance with its standard procedures
and shall deliver a certificate of such disposition to the Company. If the
Issuer or its agent shall acquire any of the Securities, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are delivered to the
Trustee or its agent for cancellation.
SECTION 2.11. Temporary Securities. Pending the preparation of
definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be
issuable in any authorized denomination, and substantially in the form of the
definitive Securities of such series but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Issuer with the concurrence of the Trustee as evidenced by
the execution and authentication thereof. Temporary Securities may contain
such references to any provisions of this Indenture as may be appropriate.
Every temporary Security shall be executed by the Issuer and be authenticated
by the Trustee upon the same conditions and in substantially the same manner,
and with like effect, as the definitive Securities. Without unreasonable delay
the Issuer shall execute and shall furnish definitive Securities of such
series and thereupon temporary Securities of such series may be surrendered in
exchange therefor without charge at each office or agency to be maintained by
the Issuer for that purpose pursuant to Section 3.2 and the Trustee shall
authenticate and deliver in exchange for such temporary Securities of such
series an equal aggregate principal amount of definitive Securities of the
same series having authorized denominations. Until so exchanged, the temporary
Securities of any series shall be entitled to the same benefits under this
Indenture as definitive Securities of such series, unless otherwise
established pursuant to Section 2.3.
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SECTION 2.12. CUSIP Numbers. The Issuer in issuing the Securities may
use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to
the correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed only
on the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
ARTICLE THREE
COVENANTS
SECTION 3.1. Payment of Principal and Interest. The Issuer covenants
and agrees that it will duly and punctually pay or cause to be paid the
principal of, premium, if any, and interest, if any, on each of the Securities
at the place, at the respective times and in the manner provided in the
Securities.
SECTION 3.2. Offices for Notices and Payments, etc. So long as any of
the Securities are Outstanding, the Issuer will maintain in each Place of
Payment, an office or agency where the Securities may be presented for
payment, an office or agency where the Securities may be presented for
registration of transfer and for exchange as provided in this Indenture, and
an office or agency where notices and demands to or upon the Issuer in respect
of the Securities or of this Indenture may be served. In case the Issuer shall
at any time fail to maintain any such office or agency, or shall fail to give
notice to the Trustee of any change in the location thereof, presentation may
be made and notice and demand may be served in respect of the Securities or of
this Indenture at the Corporate Trust Office. The Issuer hereby initially
designates the Corporate Trust Office for each such purpose and appoints the
Trustee as registrar and paying agent and as the agent upon whom notices and
demands may be served with respect to the Securities.
SECTION 3.3. No Interest Extension. In order to prevent any
accumulation of claims for interest after maturity thereof, the Issuer will
not directly or indirectly extend or consent to the extension of the time for
the payment of any claim for interest on any of the Securities and will not
directly or indirectly be a party to or approve any such arrangement by the
purchase or funding of said claims or in any other manner; provided, however,
that this Section 3.3 shall not apply in any case where an extension shall be
made pursuant to a plan proposed by the Issuer to the Holders of all
Securities of any series then Outstanding.
SECTION 3.4. Appointments to Fill Vacancies in Trustee's Office. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of the
Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 3.5. Provision as to Paying Agent. (a) If the Issuer shall
appoint a paying agent other than the Trustee, it will cause such paying agent
to execute and deliver to the Trustee an instrument in which such paying agent
shall agree with the Trustee, subject to the provisions of this Section 3.5,
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(1) that it will hold all sums held by it as such paying agent for
the payment of the principal of or interest, if any, on the Securities
(whether such sums have been paid to it by the Issuer or by any other
obligor on the Securities) in trust for the benefit of the Holders of the
Securities and the Trustee; and
(2) that it will give the Trustee notice of any failure by the
Issuer (or by any other obligor on the Securities) to make any payment of
the principal of, premium, if any, or interest, if any, on the Securities
when the same shall be due and payable; and
(3) that it will, at any time during the continuance of any such
failure, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such paying agent.
(b) If the Issuer shall act as its own paying agent, it will, on or
before each due date of the principal of or interest, if any, on the
Securities, set aside, segregate and hold in trust for the benefit of the
Holders of the Securities a sum sufficient to pay such principal, premium, if
any, or interest, if any, so becoming due and will notify the Trustee of any
failure to take such action and of any failure by the Issuer (or by any other
obligor under the Securities) to make any payment of the principal of,
premium, if any, or interest, if any, on the Securities when the same shall
become due and payable.
(c) Anything in this Section 3.5 to the contrary notwithstanding, the
Issuer may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid
to the Trustee all sums held in trust by it, or any paying agent hereunder, as
required by this Section 3.5, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 3.5 to the contrary notwithstanding, any
agreement of the Trustee or any paying agent to hold sums in trust as provided
in this Section 3.5 is subject to Sections 10.3 and 10.4.
(e) Whenever the Issuer shall have one or more paying agents, it
will, on or before each due date of the principal of or interest, if any, on
any Securities, deposit with a paying agent a sum sufficient to pay the
principal, premium, if any, or interest, if any, so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such principal,
premium, if any, or interest, if any, and (unless such paying agent is the
Trustee) the Issuer will promptly notify the Trustee of its action or failure
so to act.
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 4.1. Issuer to Furnish Trustee Information as to Names and
Addresses of Securityholders. The Issuer and any other obligor on the
Securities covenant and agree that they will furnish or cause to be furnished
to the Trustee a list in such form as the Trustee may reasonably require of
the names and addresses of the Holders of the Securities of each series:
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(a) semiannually and not more than 15 days after each January 1 and
July 1, and
(b) at such other times as the Trustee may request in writing,
within 15 days after receipt by the Issuer of any such request,
provided that if and so long as the Trustee shall be the registrar for such
series, such list shall not be required to be furnished.
SECTION 4.2. Preservation and Disclosure of Securityholders Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders of
each series of Securities (i) contained in the most recent list furnished to
it as provided in Section 4.1, and (ii) received by it in the capacity of
registrar or paying agent for such series, if so acting. The Trustee may
destroy any list furnished to it as provided in Section 4.1 upon receipt of a
new list so furnished.
(b) In case three or more Holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to
the Trustee reasonable proof that each such applicant has owned a Security for
a period of at least six months preceding the date of such application, and
such application states that the applicants desire to communicate with other
Holders of Securities of a particular series (in which case the applicants
must all hold Securities of such series) or with Holders of all Securities
with respect to their rights under this Indenture or under such Securities and
such application is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt of such application, at its
election, either
(i) afford to such applicants access to the information preserved at
the time by the Trustee in accordance with the provisions of subsection
(a) of this Section 4.2, or
(ii) inform such applicants as to the approximate number of Holders
of Securities of such series or of all Securities, as the case may be,
whose names and addresses appear in the information preserved at the time
by the Trustee, in accordance with the provisions of subsection (a) of
this Section 4.2, and as to the approximate cost of mailing to such
Securityholders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford to such applicants access
to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of such series or all Holders of
Securities, as the case may be, whose name and address appears in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2 a copy of the form of proxy
or other communication which is specified in such request, with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the Holders
of Securities of such series or of all Securities, as the case may be, or
would be in violation of applicable law. Such written statement shall specify
22
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter
an order refusing to sustain any of such objections or if, after the entry of
an order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met, and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Securityholders with reasonable promptness
after the entry of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such applicants
respecting their application.
(c) Each and every Holder of Securities, by receiving and holding the
same, agrees with the Issuer and the Trustee that neither the Issuer nor the
Trustee nor any agent of the Issuer or the Trustee shall be held accountable
by reason of the disclosure of any such information as to the names and
addresses of the Holders of Securities in accordance with the provisions of
subsection (b) of this Section 4.2, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under such
subsection (b).
SECTION 4.3. Reports by the Issuer. The Issuer covenants:
(a) to file with the Trustee, within 15 days after the Issuer, is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe), if any, which the Issuer may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Issuer is not required to file information, documents
or reports pursuant to either of such Sections, then to file with the Trustee
and the Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to Section
13 of the Exchange Act in respect of a debt security listed and registered on
a national securities exchange as may be prescribed from time to time in such
rules and regulations;
(b) to file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Issuer with the conditions and covenants provided for in this Indenture as
may be required from time to time by such rules and regulations;
(c) to transmit by mail to the Holders of Securities within 30 days
after the filing thereof with the Trustee, in the manner and to the extent
provided in Section 4.4(c), such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to subsections (a) and (b)
of this Section 4.3 as may be required to be transmitted to such Holders by
rules and regulations prescribed from time to time by the Commission; and
(d) to furnish to the Trustee, not less than annually, a brief
certificate from the principal executive officer, principal financial officer
or principal accounting officer as to his knowledge of the Issuer's compliance
with all conditions and covenants under this Indenture.
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For purposes of this subsection (d), such compliance shall be determined
without regard to any period of grace or requirement of notice provided under
this Indenture.
SECTION 4.4. Reports by the Trustee. (a) The Trustee shall transmit
to Holders such reports concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust Indenture Act of 1939 at
the times and in the manner provided pursuant thereto. To the extent that any
such report is required by the Trust Indenture Act of 1939 with respect to any
12 month period, such report shall cover the 12 month period ending July 15
and shall be transmitted by the next succeeding September 15.
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be furnished to the Issuer and be filed by
the Trustee with each stock exchange upon which the Securities of any
applicable series are listed and also with the Commission. The Issuer agrees
to promptly notify the Trustee with respect to any series when and as the
Securities of such series become admitted to trading on any national
securities exchange.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITY HOLDERS
ON EVENT OF DEFAULT
SECTION 5.1. Events of Default. "Event of Default", wherever used
herein with respect to Securities of any series, means any one or more of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Thirteen or otherwise),
unless it is either inapplicable to a particular series or it is specifically
deleted or modified in or pursuant to the Board Resolution or supplemental
indenture establishing such series of Securities or in the form of Security,
for such series:
(a) default in the payment of the principal of or premium, if any, of
the Securities of such series as and when the same shall become due and
payable either at maturity, upon redemption, by declaration or otherwise; or
(b) default in the payment of any installment of interest on any of
the Securities of such series as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; or
(c) default in the payment or satisfaction of any sinking fund or
other purchase obligation with respect to Securities of such series, as and
when such obligation shall become due and payable; or
(d) failure on the part of the Issuer or a Guarantor duly to observe
or perform any other of the covenants or agreements on the part of the Issuer
in the Securities of such series or in, or a Guarantor of, this Indenture
continued for a period of 90 days after the date on which written notice of
such failure, requiring the Issuer or a Guarantor to remedy the same, shall
have been given by certified or registered mail to the Issuer or a Guarantor
by the Trustee, or to the Issuer or a Guarantor and the Trustee by the Holders
of at least 25% in aggregate principal amount of the Securities of such series
then Outstanding; or
24
(e) without the consent of the Issuer a court having jurisdiction
shall enter an order for relief with respect to the Issuer or any of their
Significant Subsidiaries under any applicable bankruptcy, insolvency or other
similar law of the United States of America, any state thereof or the District
of Columbia, or without the consent of the Issuer a court having jurisdiction
shall enter a judgment, order or decree adjudging the Issuer or any of its
Significant Subsidiaries bankrupt or insolvent, or enter an order for relief
for reorganization, arrangement, adjustment or composition of or in respect of
the Issuer or any of its Significant Subsidiaries under any applicable
bankruptcy, insolvency or other similar law of the United States of America,
any state thereof or the District of Columbia, and the continuance of any such
judgment, order or decree is unstayed and in effect for a period of 60
consecutive days; or
(f) the Issuer or any of its Significant Subsidiaries shall institute
proceedings for entry of an order for relief with respect to the Issuer or any
of its Significant Subsidiaries under any applicable bankruptcy, insolvency or
other similar law of the United States of America, any state thereof or the
District of Columbia, or for an adjudication of insolvency, or shall consent
to the institution of bankruptcy or insolvency proceedings against it, or
shall file a petition seeking, or seek or consent to reorganization,
arrangement, composition or relief under any applicable bankruptcy, insolvency
or other similar law of the United States of America, any state thereof or the
District of Columbia, or shall consent to the filing of such petition or to
the appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator or similar official of the Issuer or of substantially all of its
property, or the Issuer or any of its Significant Subsidiaries shall make a
general assignment for the benefit of creditors as recognized under any
applicable bankruptcy, insolvency or other similar law of the United States of
America, any state thereof or the District of Columbia; or
(g) any other Event of Default provided with respect to the
Securities of such series; or
(h) a Guarantee ceases to be in full force and effect (other than in
accordance with the terms of any Guarantee) or a Guarantor denies or
disaffirms its obligations under the Guarantee.
If an Event of Default with respect to Securities of any series then
Outstanding occurs and is continuing, then and in each and every such case,
unless the principal of all of the Securities of such series shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Securities of such series then
Outstanding, by notice in writing to the Issuer (and to the Trustee if given
by Securityholders), may declare the principal (or, if the Securities of such
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of such series) of all the Securities
of such series and the interest, if any, accrued thereon to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, notwithstanding anything to the contrary
contained in this Indenture or in the Securities of such series. This
provision, however, is subject to the condition that, if at any time after the
unpaid principal amount (or such specified amount) of the Securities of such
series shall have been so declared due and payable and before any judgment or
decree for the payment of the moneys due shall have been obtained or entered
as hereinafter provided, the Issuer shall pay or shall deposit with the
Trustee a sum sufficient to pay all matured installments of interest, if any,
25
upon all of the Securities of such series and the principal of any and all
Securities of such series which shall have become due otherwise than by
acceleration (with interest on overdue installments of interest, if any, to
the extent that payment of such interest is enforceable under applicable law
and on such principal at the rate borne by the Securities of such series to
the date of such payment or deposit) and the reasonable compensation,
disbursements, expenses and advances of the Trustee and all other amounts due
the Trustee under Section 6.6, and any and all defaults under this Indenture,
other than the nonpayment of such portion of the principal amount of and
accrued interest, if any, on Securities of such series which shall have become
due by acceleration, shall have been cured or shall have been waived in
accordance with Section 5.7 or provision deemed by the Trustee to be adequate
shall have been made therefor, then and in every such case the Holders of a
majority in aggregate principal amount of the Securities of such series then
Outstanding, by written notice to the Issuer and to the Trustee, may rescind
and annul such declaration and its consequences; but no such rescission and
annulment shall extend to or shall affect any subsequent default, or shall
impair any right consequent thereon. Notwithstanding the previous sentence, no
waiver shall be effective against any Holder for any Event of Default or event
which with notice or lapse of time or both would be an Event of Default with
respect to any covenant or provision which cannot be modified or amended
without the consent of the Holder of each outstanding Security affected
thereby, unless all such affected Holders agree, in writing, to waive such
Event of Default or other event.
If any Event of Default with respect to the Issuer specified in
Section 5.1(e) or 5.1(f) occurs, all unpaid principal amount (or, if the
Securities of any series then Outstanding are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of each such series) and accrued interest on all Securities of each
series then Outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act by the Trustee or any
Securityholder.
If the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Issuer, the Trustee and the Securityholders shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Issuer, the Trustee and the Securityholders shall continue as
though no such proceeding had been taken.
Except with respect to an Event of Default pursuant to Section 5.1
(a), (b) or (c), the Trustee shall not be charged with knowledge of any Event
of Default unless written notice thereof shall have been given to a
Responsible Officer by the Issuer, a paying agent or any Securityholder.
SECTION 5.2. Payment of Securities on Default; Suit Therefor. The
Issuer covenants that (a) if default shall be made in the payment of any
installment of interest upon any of the Securities of any series then
Outstanding as and when the same shall become due and payable, and such
default shall have continued for a period of 30 days, or (b) if default shall
be made in the payment of the principal of any of the Securities of such
series as and when the same shall have become due and payable, whether at
maturity of the Securities of such series or upon redemption or by declaration
or otherwise, then, upon demand of the Trustee, the Issuer will pay
26
to the Trustee, for the benefit of the Holders of the Securities, the whole
amount that then shall have become due and payable on all such Securities of
such series for principal or interest, if any, or both, as the case may be,
with interest upon the overdue principal and (to the extent that payment of
such interest is enforceable under applicable law) upon the overdue
installments of interest, if any, at the rate borne by the Securities of such
series; and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including a reasonable
compensation to the Trustee, its agents, attorneys and counsel, and any
expenses or liabilities incurred by the Trustee hereunder other than through
its negligence or bad faith.
If the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any
such judgment or final decree against the Issuer or any other obligor on the
Securities of such series and collect in the manner provided by law out of the
property of the Issuer or any other obligor on the Securities of such series,
wherever situated, the moneys adjudged or decreed to be payable.
If there shall be pending proceedings for the bankruptcy or for the
reorganization of the Issuer or any other obligor on the Securities of any
series then Outstanding under any bankruptcy, insolvency or other similar law
now or hereafter in effect, or if a receiver or trustee or similar official
shall have been appointed for the property of the Issuer or such other
obligor, or in the case of any other similar judicial proceedings relative to
the Issuer or other obligor upon the Securities of such series, or to the
creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of the Securities of such series shall
then be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand pursuant to
the provisions of this Section 5.2, shall be entitled and empowered by
intervention in such proceedings or otherwise to file and prove a claim or
claims for the whole amount of principal and interest, if any, owing and
unpaid in respect of the Securities of such series, and, in case of any
judicial proceedings, to 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 and of the Securityholders allowed in such judicial proceedings
relative to the Issuer or any other obligor on the Securities of such series,
its or their creditors, or its or their property, and to collect and receive
any moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses, and any
receiver, assignee or trustee or similar official in bankruptcy or
reorganization is hereby authorized by each of the Securityholders to make
such payments to the Trustee, and, if the Trustee shall consent to the making
of such payments directly to the Securityholders, to pay to the Trustee any
amount due it for compensation and expenses or otherwise pursuant to Section
6.6, including counsel fees and expenses incurred by it up to the date of such
distribution. To the extent that such payment of reasonable compensation,
expenses and counsel fees and expenses out of the estate in any such
proceedings shall be denied for any reason, payment of the same shall be
secured by a lien on, and shall be paid out of, any and all distributions,
dividends, moneys, securities and other property which the Holders of the
Securities of such series may be entitled to receive in such proceedings,
whether in liquidation or under any plan of reorganization or arrangement or
otherwise.
27
All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall be for the ratable benefit of the
Holders of the Securities of the series in respect of which such judgment has
been recovered.
SECTION 5.3. Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee pursuant to Section 5.2 with respect to Securities of
any series then Outstanding shall be applied in the order following, at the
date or dates fixed by the Trustee for the distribution of such moneys, upon
presentation of the several Securities of such series, and stamping thereon
the payment, if only partially paid, and upon surrender thereof, if fully
paid:
FIRST: To the payment of costs and expenses of collection and
reasonable compensation to the Trustee, its agents, attorneys and
counsel, and of all other expenses and liabilities incurred, and all
advances made, by the Trustee pursuant to Section 6.6 except as a result
of its negligence or bad faith;
SECOND: If the principal of the Outstanding Securities of such
series shall not have become due and be unpaid, to the payment of
interest, if any, on the Securities of such series, in the order of the
maturity of the installments of such interest, if any, with interest (to
the extent that such interest has been collected by the Trustee) upon the
overdue installments of interest, if any, at the rate borne by the
Securities of such series, such payment to be made ratably to the Persons
entitled thereto;
THIRD: If the principal of the Outstanding Securities of such series
shall have become due, by declaration or otherwise, to the payment of the
whole amount then owing and unpaid upon the Securities of such series for
principal and interest, if any, with interest on the overdue principal
and (to the extent that such interest has been collected by the Trustee)
upon overdue installments of interest, if any, at the rate borne by the
Securities of such series; and in case such moneys shall be insufficient
to pay in full the whole amounts so due and unpaid upon the Securities of
such series, then to the payment of such principal and interest, if any,
without preference or priority of principal over interest or of interest
over principal, or of any installment of interest over any other
installment of interest, or of any Security over any other Security,
ratably to the aggregate of such principal and accrued and unpaid
interest; and
FOURTH: To the payment of any surplus then remaining to the Issuer,
its successors or assigns, or to whomsoever may be lawfully entitled to
receive the same.
No claim for interest which in any manner at or after maturity shall
have been transferred or pledged separate or apart from the Securities to
which it relates, or which in any manner shall have been kept alive after
maturity by an extension (otherwise than pursuant to an extension made
pursuant to a plan proposed by the Issuer to the Holders of all Securities of
any series then Outstanding), purchase, funding or otherwise by or on behalf
or with the consent or approval of the Issuer shall be entitled, in case of a
default hereunder, to any benefit of this Indenture, except after prior
payment in full of the principal of all Securities of any series then
28
Outstanding and of all claims for interest not so transferred, pledged, kept
alive, extended, purchased or funded.
SECTION 5.4. Proceedings by Securityholders. No Holder of any
Securities of any series then Outstanding shall have any right by virtue of or
by availing of any provision of this Indenture to institute any suit, action
or proceeding in equity or at law upon or under or with respect to this
Indenture or for the appointment of a receiver or trustee or similar official,
or for any other remedy hereunder, unless such Holder previously shall have
given to the Trustee written notice of default and of the continuance thereof,
as hereinbefore provided, and unless the Holders of not less than 25% in
aggregate principal amount of the Securities of such series then Outstanding
shall have made written request to the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee
for 60 days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding, it being understood and intended, and being expressly covenanted
by the Holder of every Security of such series with every other Holder and the
Trustee, that no one or more Holders of Securities of such series shall have
any right in any manner whatever by virtue of or by availing of any provision
of this Indenture or of the Securities to affect, disturb or prejudice the
rights of any other Holder of such Securities of such series, or to obtain or
seek to obtain priority over or preference as to any other such Holder, or to
enforce any right under this Indenture or the Securities, except in the manner
herein provided and for the equal, ratable and common benefit of all Holders
of Securities of such series.
Notwithstanding any other provisions in this Indenture, but subject
to Article Thirteen, the right of any Holder of any Security to receive
payment of the principal of, premium, if any, and interest, if any, on such
Security, on or after the respective due dates expressed in such Security, or
to institute suit for the enforcement of any such payment on or after such
respective dates shall not be impaired or affected without the consent of such
Holder.
SECTION 5.5. Proceedings by Trustee. In case of an Event of Default
hereunder, the Trustee may in its discretion proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any of such rights, either by suit in equity or by action at law or by
proceedings in bankruptcy or otherwise, whether for the specific enforcement
of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other legal
or equitable right vested in the Trustee by this Indenture or by law.
SECTION 5.6. Remedies Cumulative and Continuing. All powers and
remedies given by this Article Five to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive
of any thereof or of any other powers and remedies available to the Trustee or
the Securityholders, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture, and no delay or omission of the Trustee or of any Securityholder to
exercise any right or power accruing upon any default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be
a waiver of any such default or an acquiescence therein; and,
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subject to the provisions of Section 5.4, every power and remedy given by this
Article Five or by law to the Trustee or to the Securityholders may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or by the Securityholders.
SECTION 5.7. Direction of Proceedings; Waiver of Defaults by Majority
of Securityholders. The Holders of a majority in aggregate principal amount of
the Securities of any series then Outstanding shall have the right to direct
the time, method, and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee with respect to Securities of such series; provided, however, that
(subject to the provisions of Section 6.1) the Trustee shall have the right to
decline to follow any such direction if the Trustee shall determine upon
advice of counsel that the action or proceeding so directed may not lawfully
be taken or if the Trustee in good faith by its board of directors, its
executive committee, or a trust committee of directors or Responsible Officers
or both shall determine that the action or proceeding so directed would
involve the Trustee in personal liability. The Holders of a majority in
aggregate principal amount of the Securities of any series then Outstanding
may on behalf of the Holders of all of the Securities of such series waive any
past default or Event of Default hereunder and its consequences except a
default in the payment of interest, if any, on, or the principal of, the
Securities of such series. Upon any such waiver the Issuer, the Trustee and
the Holders of the Securities of such series shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon. Whenever any default or Event of Default hereunder shall
have been waived as permitted by this Section 5.7, said default or Event of
Default shall for all purposes of the Securities and this Indenture be deemed
to have been cured and to be not continuing.
SECTION 5.8. Notice of Defaults. The Trustee shall, within 30 days
after the occurrence of a default, with respect to Securities of any series
then Outstanding, mail to all Holders of Securities of such series, as the
names and the addresses of such Holders appear upon the Securities register,
notice of all defaults known to the Trustee with respect to such series,
unless such defaults shall have been cured before the giving of such notice
(the term "defaults" for the purpose of this Section 5.8 being hereby defined
to be the events specified in clauses (a), (b), (c), (d), (e), (f), (g) and
(h) of Section 5.1, not including periods of grace, if any, provided for
therein and irrespective of the giving of the written notice specified in said
clause (d) but in the case of any default of the character specified in said
clause (d) no such notice to Securityholders shall be given until at least 60
days after the giving of written notice thereof to the Issuer pursuant to said
clause (d)); provided, however, that, except in the case of default in the
payment of the principal of or interest, if any, on any of the Securities, or
in the payment or satisfaction of any sinking fund or other purchase
obligation, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee, or a trust
committee of directors or Responsible Officers or both, of the Trustee in good
faith determines that the withholding of such notice is in the best interests
of the Securityholders.
SECTION 5.9. Undertaking to Pay Costs. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the
cost of such suit,
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and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section 5.9 shall not
apply to any suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders, holding in the aggregate more
than 10% in principal amount of the Securities of any series then Outstanding,
or to any suit instituted by any Securityholders for the enforcement of the
payment of the principal of or interest, if any, on any Security against the
Issuer on or after the due date expressed in such Security.
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1. Duties and Responsibilities of the Trustee; During
Default; Prior to Default. In case an Event of Default with respect to the
Securities of a series has occurred (which has not been cured or waived) the
Trustee shall exercise with respect to such series of Securities 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 man would exercise or use under
the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with respect to the
Securities of any series and after the curing or waiving of all such Events of
Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect to the
Securities of any series shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable except
for the performance of such duties and obligations as are specifically
set forth in this Indenture, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Holders pursuant to Section 5.7 relating to the time, method and place of
conducting any proceeding for any remedy
31
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that
the repayment of such funds or adequate indemnity against such liability is
not reasonably assured to it.
SECTION 6.2. Certain Rights of the Trustee. Subject to Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction, order or demand of the Issuer mentioned
herein shall be sufficiently evidenced by an Officers' Certificate or Issuer
Order (unless other evidence in respect thereof be herein specifically
prescribed); and any resolution of the Board of Directors may be evidenced to
the Trustee by a Board Resolution;
(c) the Trustee may consult with counsel of its selection and any
advice of such counsel promptly confirmed in writing shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted to be taken by it hereunder in good faith and in reliance thereon
in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of this
Indenture (including, without limitation, pursuant to Section 5.7), unless
such Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred
therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing so to do by
the Holders of not less than a majority in aggregate principal amount of the
Securities of all series affected then Outstanding; provided that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such expenses or liabilities as a
32
condition to proceeding; the reasonable expenses of every such investigation
shall be paid by the Issuer or, if paid by the Trustee or any predecessor
Trustee, shall be repaid by the Issuer upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder;
(h) the Trustee shall not be charged with knowledge of any default or
Event of Default with respect to a series of Securities unless either (i) a
Responsible Officer of the Trustee assigned to the Corporate Trust Office of
the Trustee (or any successor division or department of the Trustee) shall
have actual knowledge of such default or Event of Default or (ii) written
notice of such default or Event of Default shall have been given to the
Trustee by the Issuer or any other obligor on such series of Securities or by
any Holder of Securities of such series; and
(i) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture.
SECTION 6.3. Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture, of the
Securities or of any prospectus used to sell the Securities. The Trustee shall
not be accountable for the use or application by the Issuer of any of the
Securities or of the proceeds thereof.
SECTION 6.4. Trustee and Agents May Hold Securities; Collections,
etc. The Trustee or any agent of the Issuer or the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee or such agent and,
subject to Sections 6.8 and 6.13, may otherwise deal with the Issuer and
receive, collect, hold and retain collections from the Issuer with the same
rights it would have if it were not the Trustee or such agent.
SECTION 6.5. Moneys Held by Trustee. Subject to the provisions of
Section 10.4 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the
extent required by mandatory provisions of law. Neither the Trustee nor any
agent of the Issuer or the Trustee shall be under any liability for interest
on any moneys received by it hereunder.
SECTION 6.6. Compensation and Indemnification of Trustee and Its
Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such compensation as shall be
agreed to in writing between the Issuer and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust) and the Issuer covenants and agrees to pay or reimburse the
Trustee
33
and each predecessor Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by or on behalf of it in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad
faith. The Issuer also covenants to indemnify the Trustee and each predecessor
Trustee for, and to hold it harmless against, any and all loss, liability,
damage, claim or expense, including taxes (other than taxes based on the
income of the Trustee), incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and its duties hereunder, including the
costs and expenses of defending itself against or investigating any claim or
liability in the premises. The obligations of the Issuer under this Section
6.6 to compensate and indemnify the Trustee and each predecessor Trustee and
to pay or reimburse the Trustee and each predecessor Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Trustee and shall not be subordinate to the
payment of Senior Indebtedness pursuant to Article Thirteen. Such additional
indebtedness shall be a senior claim to that of the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of particular Securities. When the
Trustee incurs expenses or renders services in connection with an Event of
Default specified in Section 5.1 or in connection with Section 5.9 hereof, the
expenses (including the reasonable fees and expenses of its counsel) and the
compensation for the service in connection therewith are intended to
constitute expenses of administration under any bankruptcy law. The provisions
of this Section 6.6 shall survive the resignation or removal of the Trustee
and the termination of this Indenture.
SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc.
Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts
of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered
or omitted by it under the provisions of this Indenture upon the faith
thereof.
SECTION 6.8. Qualification of Trustee; Conflicting Interests. This
Indenture shall always have a Trustee who satisfies the requirements of
Section 310(a)(1) of the Trust Indenture Act of 1939. The Trustee shall have a
combined capital and surplus of at least $25,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with
Section 310(b) of the Trust Indenture Act of 1939 regarding disqualification
of a trustee upon acquiring a conflicting interest.
SECTION 6.9. Persons Eligible for Appointment as Trustee; Different
Trustees for Different Series. The Trustee for each series of Securities
hereunder shall at all times be a corporation organized and doing business
under the laws of the United States of America or of any state or the District
of Columbia having a combined capital and surplus of at least $25,000,000, and
which is authorized under such laws to exercise corporate trust powers and is
34
subject to supervision or examination by federal, state or District of
Columbia authority, or a corporation or other Person permitted to act as
trustee by the Commission. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. No obligor upon the Securities or any Affiliate of
such obligor shall serve as trustee upon the Securities. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section 6.9, the Trustee shall resign immediately in the manner and with
the effect specified in Section 6.10.
A different Trustee may be appointed by the Issuer for any series of
Securities prior to the issuance of such Securities. If the initial Trustee
for any series of Securities is to be a trustee other than First Union
National Bank, the Issuer and such Trustee shall, prior to the issuance of
such Securities, execute and deliver an indenture supplemental hereto, which
shall provide for the appointment of such Trustee as Trustee for the
Securities of such series and shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustee.
SECTION 6.10. Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign with respect to one or more or all series of Securities by
giving written notice of resignation to the Issuer. Upon receiving such notice
of resignation, the Issuer shall promptly appoint a successor trustee or
trustees with respect to the applicable series by written instrument in
duplicate, executed by authority of the Board of Directors, one copy of which
instrument shall be delivered to the resigning trustee and one copy to the
successor trustee or trustees. If no successor trustee shall have been so
appointed with respect to any series and have accepted appointment within 30
days after the mailing of such notice of resignation, the resigning trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee, or any Securityholder who has been a bona fide Holder of a
Security or Securities of the applicable series for at least six months may,
subject to the provisions of Article Five, on behalf of himself and all others
similarly situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of Section
6.8 with respect to any series of Securities after written request
therefor by the Issuer or by any Securityholder who has been a bona fide
Holder of a Security or Securities of such series for at least six
months; or
(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 6.9 and shall fail to resign after written request
therefor by the Issuer or by any such Securityholder; or
35
(iii) the Trustee shall become incapable of acting with respect to
any series of Securities, or shall be adjudged a bankrupt or insolvent,
or a receiver or liquidator of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, the Issuer may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such
series by written instrument, in duplicate, executed by order of the Board of
Directors one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or, subject to the provisions
of Article Five, any Securityholder who has been a bona fide Holder of a
Security or Securities of such series for at least six months may on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
trustee with respect to such series. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the
Securities of each series then Outstanding may at any time remove the Trustee
with respect to Securities of such series and appoint a successor trustee with
respect to the Securities of such series by delivering to the Trustee so
removed, to the successor trustee so appointed and to the Issuer the evidence
provided for in Section 7.1 of the action in that regard taken by the
Securityholders. If no successor trustee shall have been so appointed with
respect to any series and have accepted appointment within 30 days after the
delivery of such evidence of removal, the Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or any
Securityholder who has been a bona fide Holder of a Security or Securities of
the applicable series for at least six months may, subject to the provisions
of Article Five, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(d) Any resignation or removal of the Trustee with respect to any
series and any appointment of a successor trustee with respect to such series
pursuant to any of the provisions of this Section 6.10 shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
6.11.
SECTION 6.11. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and
obligations with respect to such series of its predecessor hereunder, with
like effect as if originally named as trustee for such series hereunder; but,
nevertheless, on the written request of the Issuer or of the successor
trustee, upon payment of its charges then unpaid, the trustee ceasing to act
shall, subject to Section 10.4, pay over to the successor trustee all moneys
at the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Issuer shall
36
execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.6.
If a successor trustee is appointed with respect to the Securities of
one or more (but not all) series, the Issuer, the predecessor Trustee and each
successor trustee with respect to the Securities of any applicable series
shall execute and deliver an indenture supplemental hereto which shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the predecessor Trustee with respect
to the Securities of any series as to which the predecessor Trustee is not
retiring shall continue to be vested in the predecessor Trustee, and shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such trustees co-trustees of the same
trust and that each such trustee shall be trustee of a trust or trusts under
separate indentures.
No successor trustee with respect to any series of Securities shall
accept appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor trustee shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9.
Upon acceptance of appointment by any successor trustee as provided
in this Section 6.11, the Issuer shall give notice thereof to the Holders of
Securities of each series affected, by mailing such notice to such Holders at
their addresses as they shall appear on the registry books. If the Issuer
fails to give such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
given at the expense of the Issuer.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee (including the trust created by this
Indenture), shall be the successor of the Trustee hereunder, provided that
such corporation shall be qualified under the provisions of Section 6.8 and
eligible under the provisions of Section 6.9, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any of the Securities of any series shall
have been authenticated but not delivered, any such successor to the Trustee
may adopt the certificate of authentication of any predecessor Trustee and
deliver such Securities so authenticated; and, in case at that time any of the
Securities of any series shall not have been authenticated, any successor to
the Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor Trustee; and in all such
cases such certificate shall have the full force which it is anywhere in the
Securities of such series or in this Indenture provided that the certificate
of the
37
Trustee shall have; provided, that the right to adopt the certificate of
authentication of any predecessor Trustee or to authenticate Securities of any
series in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 6.13. Preferential Collection of Claims Against the Issuer.
The Trustee shall comply with Section 311(a) of the Trust Indenture Act of
1939, excluding any creditor relationship listed in Section 311(b) of the
Trust Indenture Act of 1939. A Trustee who has resigned or been removed shall
be subject to Section 311(a) of the Trust Indenture Act of 1939 to the extent
indicated therein.
SECTION 6.14. Appointment of Authenticating Agent. As long as any
Securities of a series remain Outstanding, the Trustee may, by an instrument
in writing, appoint with the approval of the Issuer an authenticating agent
(the "Authenticating Agent") which shall be authorized to act on behalf of the
Trustee to authenticate Securities, including Securities issued upon exchange,
registration of transfer, partial redemption or pursuant to Section 2.9.
Securities of each such series authenticated by such Authenticating Agent
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee. Whenever
reference is made in this Indenture to the authentication and delivery of
Securities of any series by the Trustee or to the Trustee's Certificate of
Authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent for such series
and a Certificate of Authentication executed on behalf of the Trustee by such
Authenticating Agent. Such Authenticating Agent shall at all times be a
corporation organized and doing business under the laws of the United States
of America or of any state or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $25,000,000 (determined as provided in Section 6.9 with respect to
the Trustee) and subject to supervision or examination by federal or state
authority.
Any corporation into which any Authenticating Agent may be merged or
converted, or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency
business (including the authenticating agency contemplated by this Indenture)
of any Authenticating Agent, shall continue to be the Authenticating Agent
with respect to all series of Securities for which it served as Authenticating
Agent without the execution or filing of any paper or any further act on the
part of the Trustee or such Authenticating Agent. Any Authenticating Agent may
at any time, and if it shall cease to be eligible shall, resign by giving
written notice of resignation to the Trustee and to the Issuer. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to the Issuer.
Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 6.14 with respect
to one or more series of Securities, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Issuer and the Issuer
shall provide notice of such appointment to all Holders of Securities of such
series in the manner and to the extent provided in Section 11.4. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities
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of its predecessor hereunder, with like effect as if originally named as
Authenticating Agent. The Issuer agrees to pay to the Authenticating Agent for
such series from time to time reasonable compensation. The Authenticating
Agent for the Securities of any series shall have no responsibility or
liability for any action taken by it as such at the direction of the Trustee.
Sections 6.2, 6.3, 6.4 and 7.3 shall be applicable to any
Authenticating Agent.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1. Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in principal amount of the Securityholders of any or all series may
be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such specified percentage of Securityholders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee. Proof of execution of any instrument
or of a writing appointing any such agent shall be sufficient for any purpose
of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of
the Trustee and the Issuer, if made in the manner provided in this Article
Seven.
SECTION 7.2. Proof of Execution of Instruments and of Holding of
Securities. Subject to Sections 6.1 and 6.2, the execution of any instrument
by a Securityholder or his agent or proxy may be proved in the following
manner:
(a) The fact and date of the execution by any Holder of any
instrument may be proved by the certificate of any notary public or other
officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the person executing such instruments acknowledged to
him the execution thereof, or by an affidavit of a witness to such execution
sworn to before any such notary or other such officer. Where such execution is
by or on behalf of any legal entity other than an individual, such certificate
or affidavit shall also constitute sufficient proof of the authority of the
person executing the same.
(b) The ownership of Securities shall be proved by the Security
register or by a certificate of the Security registrar.
SECTION 7.3. Holders to be Treated as Owners. The Issuer, the Trustee
and any agent of the Issuer or the Trustee may deem and treat the Person in
whose name any Security shall be registered upon the Security register for
such series as the absolute owner of such Security (whether or not such
Security shall be overdue and notwithstanding any notation of ownership or
other writing thereon) for the purpose of receiving payment of or on account
of the principal of and, subject to the provisions of this Indenture,
interest, if any, on such Security and for all other purposes; and neither the
Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be
affected by any notice to the contrary.
SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Outstanding
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Securities of any or all series have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Issuer or by
any other obligor on the Securities with respect to which such determination
is being made or by any Affiliate of the Issuer or any other obligor on the
Securities with respect to which such determination is being made, shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination, except that for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, consent or waiver only
Securities which a Responsible Officer of the Trustee knows are so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to such Securities
and that the pledgee is not the Issuer or any other obligor upon the
Securities or any Affiliate of the Issuer or any other obligor on the
Securities. In case of a dispute as to such right, the advice of counsel shall
be full protection in respect of any decision made by the Trustee in
accordance with such advice. Upon request of the Trustee, the Issuer shall
furnish to the Trustee promptly an Officers' Certificate listing and
identifying all Securities, if any, known by the Issuer to be owned or held by
or for the account of any of the above-described Persons; and, subject to
Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Securities not listed therein are Outstanding for the purpose of
any such determination.
SECTION 7.5. Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Trustee, as provided in Section 7.1,
of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action, any Holder of a
Security the serial number of which is shown by the evidence to be included
among the serial numbers of the Securities the Holders of which have consented
to such action may, by filing written notice at the Corporate Trust Office and
upon proof of holding as provided in this Article Seven, revoke such action so
far as concerns such Security provided that such revocation shall not become
effective until three Business Days after such filing. Except as aforesaid,
any such action taken by the Holder of any Security shall be conclusive and
binding upon such Holder and upon all future Holders and owners of such
Security and of any Securities issued in exchange or substitution therefor or
on registration of transfer thereof, irrespective of whether or not any
notation in regard thereto is made upon any such Security. Any action taken by
the Holders of the percentage in aggregate principal amount of the Securities
of any or all series, as the case may be, specified in this Indenture in
connection with such action shall be conclusively binding upon the Issuer, the
Trustee and the Holders of all the Securities affected by such action.
SECTION 7.6. Record Date for Consents and Waivers. The Issuer may,
but shall not be obligated to, establish a record date for the purpose of
determining the Persons entitled to (i) waive any past default with respect to
the Securities of such series in accordance with Section 5.7 of the Indenture,
(ii) consent to any supplemental indenture in accordance with Section 8.2 of
the Indenture or (iii) waive compliance with any term, condition or provision
of any covenant hereunder. If a record date is fixed, the Holders on such
record date, or their duly designated proxies, and any such Persons, shall be
entitled to waive any such past default, consent to any such supplemental
indenture or waive compliance with any such term, condition or provision,
whether or not such Holder remains a Holder after such record date; provided,
however, that unless such waiver or consent is obtained from the Holders, or
duly designated
40
proxies, of the requisite principal amount of Outstanding Securities of such
series prior to the date which is the 120th day after such record date, any
such waiver or consent previously given shall automatically and without
further action by any Holder be cancelled and of no further effect.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a Board Resolution (which
resolution may provide general terms or parameters for such action and may
provide that the specific terms of such action may be determined in accordance
with or pursuant to an Issuer Order), and the Trustee may from time to time
and at any time enter into an indenture or indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act of 1939 as
in force at the date of the execution thereof) for one or more of the
following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee
as security for the Securities of one or more series any property or
assets;
(b) to evidence the succession of another Person to the Issuer, or
successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Issuer herein and the
Securities or the Guarantees;
(c) to add to the covenants of the Issuer such further covenants,
restrictions, conditions or provisions for the protection of the Holders
of all or any series of Securities (and if such covenants, restrictions,
conditions or provisions are to be for the protection of less than all
series of Securities, stating that the same are expressly being included
solely for the protection of such series) or to surrender any right or
power herein conferred upon the Issuer, and to make the occurrence, or
the occurrence and continuance, of a default in any such additional
covenants, restrictions, conditions or provisions an Event of Default
permitting the enforcement of all or any of the several remedies provided
in this Indenture as herein set forth; provided, however, that in respect
of any such additional covenant, restriction, condition or provision such
supplemental indenture may provide for a particular period of grace after
default (which period may be shorter or longer than that allowed in the
case of other defaults) or may provide for an immediate enforcement upon
such an Event of Default or may limit the remedies available to the
Trustee upon such an Event of Default or may limit the right of the
Holders of a majority in aggregate principal amount of the Securities of
such series to waive such an Event of Default;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective
or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make any other provisions as the Issuer may
deem necessary or desirable, provided, however, that no such action shall
materially adversely affect the interests of the Holders of the
Securities;
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(e) to establish the form or terms of Securities or the Guarantees
to be endorsed thereon of any series as permitted by Sections 2.1 and
2.3;
(f) to provide for the issuance of Securities of any series in
coupon form (including Securities registrable as to principal only) and
to provide for exchangeability of such Securities for the Securities
issued hereunder in fully registered form and to make all appropriate
changes for such purpose;
(g) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the Trust Indenture Act of 1939, or under any similar
federal statute hereafter enacted, and to add to this Indenture such
other provisions as may be expressly permitted by the Trust Indenture Act
of 1939, excluding, however, the provisions referred to in Section
316(a)(2) of the Trust Indenture Act of 1939 as in effect at the date as
of which this instrument was executed or any corresponding provision
provided for in any similar federal statute hereafter enacted; and
(h) to evidence and provide for the acceptance of appointment
hereunder of a Trustee other than First Union National Bank as Trustee
for a series of Securities and to add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 6.9 hereof;
(i) subject to Section 8.2 hereof, to add to or modify the
provisions hereof as may be necessary or desirable to provide for the
denomination of Securities in foreign currencies which shall not
adversely affect the interests of the Holders of the Securities in any
material respect;
(j) to modify the covenants or Events of Default of the Issuer
solely in respect of, or add new covenants or Events of Default of the
Issuer that apply solely to, Securities not Outstanding on the date of
such supplemental indenture; and
(k) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee, pursuant
to the requirements of Section 6.11.
The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the
Securities then Outstanding, notwithstanding any of the provisions of Section
8.2.
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SECTION 8.2. Supplemental Indentures with Consent of Securityholders.
With the consent (evidenced as provided in Article Seven) of the Holders of
not less than a majority in aggregate principal amount of the Securities then
Outstanding of any series affected by such supplemental indenture, the Issuer,
when authorized by a Board Resolution (which resolution may provide general
terms or parameters for such action and may provide that the specific terms of
such action may be determined in accordance with or pursuant to an Issuer
Order), and the Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act of 1939 as in force at the date of
execution thereof) for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Securities of such series; provided, that no such supplemental
indenture shall (a) extend the stated final maturity of the principal of any
Security, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest, if any, thereon (or, in the case of an
Original Issue Discount Security, reduce the rate of accretion of original
issue discount thereon), or reduce or alter the method of computation of any
amount payable on redemption, repayment or purchase by the Issuer thereof (or
the time at which any such redemption, repayment or purchase may be made), or
make the principal thereof (including any amount in respect of original issue
discount), or interest, if any, thereon payable in any coin or currency other
than that provided in the Securities or in accordance with the terms of the
Securities, or reduce the amount of the principal of an Original Issue
Discount Security that would be due and payable upon an acceleration of the
maturity thereof or the amount thereof provable in bankruptcy in each case
pursuant to Article Five, or impair or affect the right of any Securityholder
to institute suit for the payment thereof or, if the Securities provide
therefor, any right of repayment or purchase at the option of the
Securityholder, in each case without the consent of the Holder of each
Security so affected, or (b) reduce the aforesaid percentage of Securities of
any series, the consent of the Holders of which is required for any such
supplemental indenture, without the consent of the Holders of each Security so
affected. No consent of any Holder of any Security shall be necessary under
this Section 8.2 to permit the Trustee and the Issuer to execute supplemental
indentures pursuant to Sections 8.1 and 9.2.
A supplemental indenture which changes or eliminates any covenant,
Event of Default or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series of
Securities, or which modifies the rights of Holders of Securities of such
series, with respect to such covenant or provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any
other series.
Upon the request of the Issuer, accompanied by a copy of a resolution
of the Board of Directors (which resolution may provide general terms or
parameters for such action and may provide that the specific terms of such
action may be determined in accordance with or pursuant to an Issuer Order)
certified by the secretary or an assistant secretary of the Issuer authorizing
the execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence of the consent of the Holders of the Securities as
aforesaid and other documents, if any, required by Section 7.1, the Trustee
shall join with the Issuer in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may at
its discretion, but shall not be obligated to, enter into such supplemental
indenture.
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It shall not be necessary for the consent of the Securityholders
under this Section 8.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 8.2, the
Issuer (or the Trustee at the request and expense of the Issuer) shall give
notice thereof to the Holders of then Outstanding Securities of each series
affected thereby, as provided in Section 11.4. Any failure of the Issuer to
give such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
SECTION 8.3. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Trustee, the Issuer and the
Holders of Securities of each series affected thereby shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and shall be deemed to be part of the terms
and conditions of this Indenture for any and all purposes.
SECTION 8.4. Documents to Be Given to Trustee. The Trustee, subject
to the provisions of Sections 6.1 and 6.2, shall be entitled to receive an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant to this Article Eight complies
with the applicable provisions of this Indenture and that all conditions
precedent to the execution and delivery of such supplemental indenture have
been satisfied.
SECTION 8.5. Notation on Securities in Respect of Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article Eight may bear a notation in form approved by the Trustee for such
series as to any matter provided for by such supplemental indenture or as to
any action taken by Securityholders. If the Issuer or the Trustee shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Issuer, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by
the Issuer, authenticated by the Trustee and delivered in exchange for the
Securities of such series then Outstanding.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR OTHER DISPOSITION
SECTION 9.1. Consolidate Permitted, etc., on Certain Terms. Subject
to the provisions of Section 9.2, nothing contained in this Indenture or in
any of the Securities shall prevent any consolidation or merger of the Issuer
with or into any other Person or Persons (whether or not affiliated with the
Issuer), or successive consolidations or mergers in which the Issuer or their
successor or successors shall be a party or parties, or shall prevent any
sale, lease, exchange or other disposition of all or substantially all the
property and assets of the Issuer to any other Person (whether or not
affiliated with the Issuer) authorized to acquire and operate the same;
provided, however, and the Issuer hereby covenant and agree, that any such
consolidation,
44
merger, sale, lease, exchange or other disposition shall be upon the
conditions that (a) immediately after giving effect to such consolidation,
merger, sale, lease, exchange or other disposition of the Person (whether the
Issuer or such other Person) formed by or surviving any such consolidation or
merger, or to which such sale, lease, exchange or other disposition shall have
been made, no Event of Default, and no event which after notice or lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing; (b) the Person (if other than the Issuer) formed by or surviving
any such consolidation or merger, or to which such sale, lease, exchange or
other disposition shall have been made, shall be a corporation or partnership
organized under the laws of the United States of America, any state thereof or
the District of Columbia; and (c) the due and punctual payment of the
principal of and interest, if any, on all the Securities, according to their
tenor, and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed by the Issuer,
shall be expressly assumed, by supplemental indenture satisfactory in form to
the Trustee executed and delivered to the Trustee, by the Person (if other
than the Issuer) formed by such consolidation, or into which the Issuer shall
have been merged, or by the Person which shall have acquired or leased such
property.
SECTION 9.2. Successor Corporation to be Substituted. In case of any such
consolidation or merger or any sale, conveyance or lease of all or
substantially all of the property of the Issuer and upon the assumption by the
successor Person, by supplemental indenture executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual
payment of the principal of, premium, if any, and interest, if any, on all of
the Securities and the due and punctual performance of all of the covenants
and conditions of this Indenture to be performed by the Issuer, such successor
Person shall succeed to and be substituted for the Issuer, with the same
effect as if it had been named herein as the party of the first part, and the
Issuer (including any intervening successor to the Issuer which shall have
become the obligor hereunder) shall be relieved of any further obligation
under this Indenture and the Securities; provided, however, that in the case
of a sale, lease, exchange or other disposition of the property and assets of
the Issuer (including any such intervening successor), the Issuer (including
any such intervening successor) shall continue to be liable on its obligations
under this Indenture and the Securities to the extent, but only to the extent,
of liability to pay the principal of, premium, if any, and interest, if any,
on the Securities at the time, places and rate prescribed in this Indenture
and the Securities. Such successor Person thereupon may cause to be signed,
and may issue either in its own name or in the name of the Issuer, any or all
of the Securities issuable hereunder which theretofore shall not have been
signed by the Issuer and delivered to the Trustee; and, upon the order of such
successor Person instead of the Issuer or and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously shall have been
signed and delivered by the officers of the Issuer to the Trustee for
authentication, and any Securities which such successor Person thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All
the Securities so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or thereafter
issued in accordance with the terms of this Indenture as though all of such
Securities had been issued at the date of the execution hereof.
In case of any such consolidation or merger or any sale, lease,
exchange or other disposition of all or substantially all of the property and
assets of the Issuer, such changes in
45
phraseology and form (but not in substance) may be made in the Securities,
thereafter to be issued, as may be appropriate.
SECTION 9.3. Opinion of Counsel to be Given Trustee. The Trustee,
subject to Sections 6.1 and 6.2, shall receive an Officers' Certificate and
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, lease, exchange or other disposition and any such assumption complies
with the provisions of this Article Nine.
ARTICLE TEN
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 10.1. Applicability of Article. Unless specified otherwise
pursuant to Section 2.3 for Securities of a series, this Article shall apply
to each series of Securities issued under this Indenture.
SECTION 10.2. Legal Defeasance And Discharge. The Issuer shall,
subject to the satisfaction of the conditions set forth in Section 10.4
hereof, be deemed to have been discharged from its obligations with respect to
all Outstanding Securities on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Issuer shall be deemed to have paid and discharged
the entire Indebtedness represented by the Outstanding Securities, which shall
thereafter be deemed to be Outstanding only for the purposes of Section 10.5
hereof and the other Sections of this Indenture referred to in clauses (a) and
(b) below, and to have satisfied all of its obligations under such Securities
and this Indenture (and the Trustee, on demand of and at the expense of the
Issuer, shall execute proper instruments delivered to it by the Issuer
acknowledging the same), except of the following provisions which shall
survive until otherwise terminated or discharged hereunder; (a) the rights of
Holder of Outstanding Securities to receive payments in respect of the
principal of, premium, if any, and interest on such Securities when such
payments are due from the trust referred to below; (b) the Issuer's
obligations with respect to the Securities concerning mutilated, destroyed,
lost or stolen Securities and the maintenance of an office or agency for
payment and money for security payments held in trust; (c) the rights, powers,
trusts, duties and immunities of the Trustee, and the Issuer's obligations in
connection therewith; and (d) the Legal Defeasance provisions of this
Indenture.
SECTION 10.3. Covenant Defeasance. The Issuer shall, subject to the
satisfaction of the conditions set forth in Section 10.4 hereof, be released
from its obligations under the covenants contained in Articled Nine and to the
extent described in the applicable supplemental indenture, with respect to any
series of Securities, with respect to the Outstanding Securities on and after
the date of the conditions set forth in Section 10.4 are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not Outstanding for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed Outstanding
for all other purposes hereunder (it being understood that such Securities
shall not be deemed outstanding for accounting purposes). For this purpose,
Covenant Defeasance means that, with respect to the Outstanding Securities,
the Issuer may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to
46
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a default or an Event of Default under Section 5.1
hereof, but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby. Subject to the satisfaction of
the conditions set forth in Section 10.4 hereof, Sections 5.1(e), 5.1(f) and
5.1(g) hereof shall not constitute Events of Default or defaults hereunder.
SECTION 10.4. Conditions To Legal Or Covenant Defeasance. The
following shall be the conditions to the application of either Section 10.2 or
10.3 hereof to the Outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuer must irrevocably deposit, or cause to be deposited,
with the Trustee, in trust, for the benefit of the Holders of the
Securities, cash in U.S. dollars, U.S. Government Obligations, or a
combination thereof, in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public
accountants, to pay, without reinvestment, the principal of, premium, if
any, and interest on the Outstanding Securities on the stated maturity
thereof or on the applicable redemption date, as the case may be, and the
Issuer must specify whether the Securities are being defeased to maturity
or to a particular redemption date;
(b) in the case of Legal Defeasance, the Issuer must deliver to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Issuer has received from, or there has been published
by, the Internal Revenue Service a ruling, or there has been a change in
the applicable United States federal income tax law after the date of
this Indenture, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the Outstanding
Securities will not recognize income, gain or loss for United States
federal income tax purposes as a result of such Legal Defeasance, and
will be subject to United States federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Issuer must deliver to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the Outstanding Securities will not
recognize income, gain or loss for United States federal income tax
purposes as a result of such Covenant Defeasance, and such Holders will
be subject to United States federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(d) no default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
47
(e) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under, any material
agreement or instrument (other than the Indenture) to which the Issuer or
any of its Restricted Subsidiaries is a party or by which the issuer or
any of its Restricted Subsidiaries is bound;
(f) the Issuer must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Issuer with the intent of
preferring the Holders of the Securities over other creditors of the
Issuer, or with the intent of defeating, hindering, delaying or
defrauding creditors of the Issuer or others;
(g) the Issuer must deliver to the Trustee an Officers' Certificate
and an opinion of Counsel in the United States reasonably acceptable to
the Trustee, each stating that the conditions precedent provided for or
relating to Legal Defeasance or Covenant Defeasance, as applicable, in
the case of the Officer's Certificate, in clauses (a) through (f) and, in
the case of the opinion of Counsel, in clauses (b) and (c) of this
paragraph, have been complied with.
SECTION 10.5. Deposited Money And Government Securities To Be Held In
Trust; Other Miscellaneous Provisions. Subject to Section 10.6 hereof, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively, and
solely for purposes of this Section 10.5, the "Trustee") pursuant to Section
10.4 hereof in respect of the outstanding Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Issuer acting as Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
The Issuer shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable U.S.
Government Obligations deposited pursuant to Section 10.4 hereof or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
Outstanding Securities.
Anything in this Article Ten to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon the request
of the Issuer any money or non-callable U.S. Government Obligations held by it
as provided in Section 10.4 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 10.4(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 10.6. Repayment To Issuer. Any money deposited with the
Trustee or any Paying Agent, or then held by the Issuer, in trust for the
payment of the principal of, premium or interest on any Security and remaining
unclaimed for two years after such principal, and premium, if any, or interest
has become due and payable shall be paid to the Issuer on its request or (if
then held by the Issuer) shall be discharged from such trust; and the Holder
of such
48
Security shall thereafter, as an unsecured creditor, look only to the Issuer
for payment thereof, and all liability of the Trustee or such Paying Agent
with respect to such trust money, and all liability of the Issuer as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Issuer cause to be published once, in the New York Times and
The Wall Street Journal (national edition), 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 notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer
SECTION 10.7. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or non-callable U.S. Government Obligations in accordance
with Section 10.2 or 10.3 hereof, as the case may be, by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Issuer's obligations under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 10.2 or 10.3 hereof until such time
as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 10.2 or 10.3 hereof, as the case may be; provided,
however, that, if the Issuer makes any payment of principal of, premium, if
any, or interest on any Security following the reinstatement of its
obligations, the Issuer shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money held by the Trustee or
Paying Agent.
SECTION 10.8. Survival. The Trustee's rights under this Article Ten
shall survive termination of this Indenture.
SECTION 10.9. Satisfaction and Discharge of Indenture. If at any time
(a) the Issuer shall have paid or caused to be paid the principal of, premium,
if any, and interest, if any, on all the Securities Outstanding (other than
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.9) as and when the same shall have
become due and payable, or (b) the Issuer shall have delivered to the Trustee
for cancellation all Securities theretofore authenticated (other than
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.9); and if, in any such case, the
Issuer shall also pay or cause to be paid all other sums payable hereunder by
the Issuer (including all amounts, payable to the Trustee pursuant to Section
6.6), then this Indenture shall cease to be of further effect, and the
Trustee, on demand of the Issuer accompanied by an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent relating to
the satisfaction and discharge contemplated by this provision have been
complied with, and at the cost and expense of the Issuer, shall execute proper
instruments acknowledging such satisfaction and discharging this Indenture.
The Issuer agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred, and to compensate the Trustee for
any services thereafter reasonably and properly rendered, by the Trustee in
connection with this Indenture or the Securities.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1. Partners, Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability. No recourse under or
upon any obligation, covenant
49
or agreement contained in this Indenture, or in any Security, or because of
any indebtedness evidenced thereby, shall be had against any incorporator, as
such or against any past, present or future stockholder, officer or director,
as such, of the Issuer, or any partner of the Issuer or of any successor,
either directly or through the Issuer or any successor, under any rule of law,
statute or constitutional provision or by the enforcement of any assessment or
by any legal or equitable proceeding or otherwise, all such liability being
expressly waived and released by the acceptance of the Securities by the
Holders thereof and as part of the consideration for the issue of the
Securities.
SECTION 11.2. Provisions of Indenture for the Sole Benefit of Parties
and Holders of Securities. Nothing in this Indenture or in the Securities,
expressed or implied, shall give or be construed to give to any Person, other
than the parties hereto and their successors and the Holders of the Senior
Indebtedness and the Holders of the Securities, any legal or equitable right,
remedy or claim under this Indenture or under any covenant or provision herein
contained, all such covenants and provisions being for the sole benefit of the
parties hereto and their successors and of the Holders of the Securities.
SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Issuer shall bind its successors and assigns,
whether so expressed or not.
SECTION 11.4. Notices and Demands on Issuer, Trustee and Holders of
Securities. Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the Holders
of Securities to or on the Issuer, or as required pursuant to the Trust
Indenture Act of 1939, may be given or served by being deposited postage
prepaid, first-class mail (except as otherwise specifically provided herein)
addressed (until another address of the Issuer is filed by the Issuer with the
Trustee) to Hovnanian Enterprises, Inc., 10 Highway 35, P.O. Box 500, Red
Bank, New Jersey 07701. Any notice, direction, request or demand by the Issuer
or any Holder of Securities to or upon the Trustee shall be deemed to have
been sufficiently given or served by being deposited postage prepaid,
first-class mail (except as otherwise specifically provided herein) addressed
(until another address of the Trustee is filed by the Trustee with the Issuer)
to First Union National Bank, 21 South Street, Morristown, New Jersey 07960,
[attention: Corporate Trust Administration (Hovnanian Enterprises, Inc.
[specify series of Securities])].
Where this Indenture provides for notice to Holders of Securities,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder entitled thereto, at his last address as it appears in the Security
register. Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Issuer when such
notice is required to be given
50
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be reasonably satisfactory to the Trustee shall be deemed to
be sufficient notice.
SECTION 11.5. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, or as required pursuant to the Trust Indenture Act of 1939, the
Issuer shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture (other
than a certificate provided pursuant to Section 4.3(d)) and delivered to the
Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition, (b) 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, (c) 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
opinion as to whether or not such covenant or condition has been complied
with, and (d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters, on information with respect to which
is in the possession of the Issuer, upon the certificate, statement or opinion
of or representations by an officer or officers of the Issuer, unless such
counsel knows that the certificate, statement or opinion or representations
with respect to the matters upon which his certificate, statement or opinion
may be based as aforesaid are erroneous, or in the exercise of reasonable care
should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or
of counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer or unless such officer or counsel, as
the case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.
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SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays. If the
date of maturity of principal of or interest, if any, on the Securities of any
series or the date fixed for redemption, purchase or repayment of any such
Security shall not be a Business Day, then payment of interest, if any,
premium, if any, or principal need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made
on the date of maturity or the date fixed for redemption, purchase or
repayment, and, in the case of payment, no interest shall accrue for the
period after such date.
SECTION 11.7. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with another provision included in
this Indenture which is required to be included herein by any of Sections 310
to 317, inclusive, or is deemed applicable to this Indenture by virtue of the
provisions, of the Trust Indenture Act of 1939, such required provision shall
control.
SECTION 11.8. GOVERNING LAW. THIS INDENTURE AND EACH SECURITY SHALL
BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 11.9. Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
SECTION 11.10. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1. Applicability of Article. The provisions of this
Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any sinking fund for the retirement of
Securities of a series except as otherwise specified, as contemplated by
Section 2.3 for Securities of such series.
SECTION 12.2. Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Securities of any series to be redeemed as a
whole or in part at the option of the Issuer shall be given by mailing notice
of such redemption by first class mail, postage prepaid, at least 30 days and
not more than 60 days prior to the date fixed for redemption to such Holders
of Securities of such series at their last addresses as they shall appear in
the Security register. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or
not the Holder receives the notice. Failure to give notice by mail, or any
defect in the notice to the Holder of any Security of a series designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security of such series.
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The notice of redemption to each such Holder shall specify (i) the
principal amount of each Security of such series held by such Holder to be
redeemed, (ii) the date fixed for redemption, (iii) the redemption price, (iv)
the place or places of payment, (v) the CUSIP number relating to such
Securities, (vi) that payment will be made upon presentation and surrender of
such Securities, (vii) whether such redemption is pursuant to the mandatory or
optional sinking fund, or both, if such be the case, (viii) whether interest,
if any, (or, in the case of Original Issue Discount Securities, original issue
discount) accrued to the date fixed for redemption will be paid as specified
in such notice and (ix) whether on and after said date interest, if any, (or,
in the case of Original Issue Discount Securities, original issue discount)
thereon or on the portions thereof to be redeemed will cease to accrue. In
case any Security of a series is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Security, a new Security or Securities of such series in
principal amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be redeemed
at the option of the Issuer shall be given by the Issuer or, at the Issuer's
request, by the Trustee in the name and at the expense of the Issuer.
On or before the redemption date specified in the notice of
redemption given as provided in this Section 12.2, the Issuer will deposit
with the Trustee or with one or more paying agents (or, if the Issuer is
acting as its own paying agent, set aside, segregate and hold in trust as
provided in Section 3.5) an amount of money sufficient to redeem on the
redemption date all the Securities of such series so called for redemption at
the appropriate redemption price, together with accrued interest, if any, to
the date fixed for redemption. The Issuer will deliver to the Trustee at least
45 days prior to the date fixed for redemption (unless a shorter notice period
shall be satisfactory to the Trustee) an Officers' Certificate stating the
aggregate principal amount of Securities to be redeemed. In case of a
redemption at the election of the Issuer prior to the expiration of any
restriction on such redemption, the Issuer shall deliver to the Trustee, prior
to the giving of any notice of redemption to Holders pursuant to this Section,
an Officers' Certificate stating that such restriction has been complied with.
If less than all the Securities of a series are to be redeemed, the
Trustee, within 10 Business Days after the Issuer gives written notice to the
Trustee that such redemption is to occur, shall select, in such manner as it
shall deem appropriate and fair, Securities of such series to be redeemed.
Notice of the redemption shall be given only after such selection has been
made. Securities may be redeemed in part in multiples equal to the minimum
authorized denomination for Securities of such series or any multiple thereof.
The Trustee shall promptly notify the Issuer in writing of the Securities of
such series selected for redemption and, in the case of any Securities of such
series selected for partial redemption, the principal amount thereof to be
redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities of any
series shall relate, in the case of any Security redeemed or to be redeemed
only in part, to the portion of the principal amount of such Security which
has been or is to be redeemed.
SECTION 12.3. Payment of Securities Called for Redemption. If notice
of redemption has been given as provided by this Article Twelve, the
Securities or portions of
53
Securities specified in such notice shall become due and payable on the date
and at the place or places stated in such notice at the applicable redemption
price, together with interest, if any, accrued to the date fixed for
redemption, and on and after said date (unless the Issuer shall default in the
payment of such Securities at the redemption price, together with interest, if
any, accrued to said date) interest, if any (or, in the case of Original Issue
Discount Securities, original issue discount) on the Securities or portions of
Securities so called for redemption shall cease to accrue, and such Securities
shall cease from and after the date fixed for redemption (unless an earlier
date shall be specified in a Board Resolution, Officers' Certificate or
executed supplemental indenture referred to in Sections 2.1 and 2.3 by or
pursuant to which the form and terms of the Securities of such series were
established) except as provided in Sections 6.5 and 10.4, to be entitled to
any benefit or security under this Indenture, and the Holders thereof shall
have no right in respect of such Securities except the right to receive the
redemption price thereof and unpaid interest, if any, to the date fixed for
redemption. On presentation and surrender of such Securities at a place of
payment specified in said notice, said Securities or the specified portions
thereof shall be paid and redeemed by the Issuer at the applicable redemption
price, together with interest, if any, accrued thereon to the date fixed for
redemption; provided that payment of interest, if any, becoming due on or
prior to the date fixed for redemption shall be payable to the Holders of
Securities registered as such on the relevant record date subject to the terms
and provisions of Sections 2.3 and 2.7 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the redemption price shall, until paid or
duly provided for, bear interest from the date fixed for redemption at the
rate of interest or Yield to Maturity (in the case of an Original Issue
Discount Security) borne by such Security.
Upon presentation of any Security redeemed in part only, the Issuer
shall execute and the Trustee shall authenticate and deliver to or on the
order of the Holder thereof, at the expense of the Issuer, a new Security or
Securities of such series, and of like tenor, of authorized denominations, in
principal amount equal to the unredeemed portion of the Security so presented.
SECTION 12.4. Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and
certificate number in an Officers' Certificate delivered to the Trustee at
least 45 days prior to the last date on which notice of redemption may be
given as being owned of record and beneficially by, and not pledged or
hypothecated by either (a) the Issuer, or (b) a Person specifically identified
in such written statement as an Affiliate of the Issuer.
SECTION 12.5. Mandatory and Optional Sinking Funds. The minimum
amount of any sinking fund payment provided for by the terms of the Securities
of any series is herein referred to as a "mandatory sinking fund payment," and
any payment in excess of such minimum amount provided for by the terms of the
Securities of any series is herein referred to as an "optional sinking fund
payment." The date on which a sinking fund payment is to be made is herein
referred to as the "sinking fund payment date."
54
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Securities in cash, the Issuer may at
its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise
acquired (except as aforesaid) by the Issuer and delivered to the Trustee for
cancellation pursuant to Section 2.10, (b) receive credit for optional sinking
fund payments (not previously so, credited) made pursuant to this Section
12.5, or (c) receive credit for Securities of such series (not previously so
credited) redeemed by the Issuer through any optional redemption provision
contained in the terms of such series. Securities so delivered or credited
shall be received or credited by the Trustee at the sinking fund redemption
price specified in such Securities.
On or before the 60th day next preceding each sinking fund payment
date for any series, the Issuer will deliver to the Trustee an Officers'
Certificate (a) specifying the portion of the mandatory sinking fund payment
to be satisfied by payment of cash and the portion to be satisfied by credit
of Securities of such series and the basis for such credit, (b) stating that
none of the Securities of such series to be so credited has theretofore been
so credited, (c) stating that no defaults in the payment of interest or Events
of Default with respect to such series have occurred (which have not been
waived or cured or otherwise ceased to exist) and are continuing, and (d)
stating whether or not the Issuer intends to exercise its right to make an
optional sinking fund payment with respect to such series and, if so,
specifying the amount of such optional sinking fund payment which the Issuer
intends to pay on or before the next succeeding sinking fund payment date. Any
Securities of such series to be credited and required to be delivered to the
Trustee in order for the Issuer to be entitled to credit therefor as aforesaid
which have not theretofore been delivered to the Trustee shall be delivered
for cancellation pursuant to Section 2.10 to the Trustee with such Officers'
Certificate (or reasonably promptly thereafter if acceptable to the Trustee).
Such Officers' Certificate shall be irrevocable and upon its receipt by the
Trustee the Issuer shall become unconditionally obligated to make all the cash
payments or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Issuer, on or before any
such 60th day, to deliver such Officers' Certificate and Securities (subject
to the parenthetical clause in the second preceding sentence) specified in
this paragraph, if any, shall not constitute a default but shall constitute,
on and as of such date, the irrevocable election of the Issuer (i) that the
mandatory sinking fund payment for such series due on the next succeeding
sinking fund payment date shall be paid entirely in cash without the option to
deliver or credit Securities of such series in respect thereof, and (ii) that
the Issuer will make no optional sinking fund payment with respect to such
series as provided in this Section 12.5.
If the sinking fund payment or payments (mandatory or optional or
both) to be made in cash on the next succeeding sinking fund payment date plus
any unused balance of any preceding sinking fund payments made in cash shall
exceed $50,000, or a lesser sum if the Issuer shall so request with respect to
the Securities of any particular series, such cash shall be applied on the
next succeeding sinking fund payment date to the redemption of Securities of
such series at the sinking fund redemption price together with accrued
interest, if any, to the date fixed for redemption. If such amount shall be
$50,000 or less and the Issuer makes no such request, then it shall be carried
over until a sum in excess of $50,000 is available. The Trustee shall select,
in the manner provided in Section 12.2, for redemption on such sinking fund
payment date a
55
sufficient principal amount of Securities of such series to absorb said cash,
as nearly as may be, and shall (if requested in writing by the Issuer) inform
the Issuer of the serial numbers of the Securities of such series (or portions
thereof) so selected. The Issuer, or the Trustee, in the name and at the
expense of the Issuer (if the Issuer shall so request the Trustee in writing)
shall cause notice of redemption of the Securities of such series to be given
in substantially the manner provided in Section 12.2 (and with the effect
provided in Section 12.3) for the redemption of Securities of such series in
part at the option of the Issuer. The amount of any sinking fund payments not
so applied or allocated to the redemption of Securities of such series shall
be added to the next cash sinking fund payment for such series and, together
with such payment, shall be applied in accordance with the provisions of this
Section 12.5. Any and all sinking fund moneys held on the stated maturity date
of the Securities of any particular series (or earlier, if such maturity is
accelerated), which are not held for the payment or redemption of particular
Securities of such series shall be applied, together with other moneys, if
necessary, sufficient for the purpose, to the payment of the principal of, and
interest, if any, on, the Securities of such series at maturity.
On or before each sinking fund payment date, the Issuer shall pay to
the Trustee in cash or shall otherwise provide for the payment of all
interest, if any, accrued to the date fixed for redemption on Securities to be
redeemed on such sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities
of a series with sinking fund moneys or give any notice of redemption of
Securities for such series by operation of the sinking fund during the
continuance of a default in payment of interest on such Securities or of any
Event of Default with respect to such series except that, where the giving of
notice of redemption of any Securities shall theretofore have been made, the
Trustee shall redeem or cause to be redeemed such Securities, provided that it
shall have received from the Issuer a sum sufficient for such redemption.
Except as aforesaid, and subject to Article Thirteen, any moneys in the
sinking fund for such series at the time when any such default or Event of
Default known to a Responsible Officer of the Trustee shall occur, and any
moneys thereafter paid into the sinking fund, shall, during the continuance of
such default or Event of Default, be deemed to have been collected under
Article Five and held for the payment of all such Securities. In case such
Event of Default shall have been waived as provided in Article Five or the
default cured on or before the 60th day preceding the sinking fund payment
date in any year, such moneys shall thereafter be applied on the next
succeeding sinking fund payment date in accordance with this Section to the
redemption of such Securities.
ARTICLE THIRTEEN
SUBORDINATION
SECTION 13.1. Securities Subordinated to Senior Indebtedness. (a) The
Issuer covenants and agrees, and each Holder of Securities of each series, by
his acceptance thereof, likewise covenants and agrees, that anything in this
Indenture or the Securities of any series to the contrary notwithstanding, the
indebtedness evidenced by the Securities of each series is subordinate and
junior in right of payment, to the extent provided herein, to all Senior
Indebtedness, whether outstanding on the date of execution of this Indenture
or thereafter created, incurred or assumed, and that the subordination is for
the benefit of the holders of Senior Indebtedness.
56
(b) Subject to Section 13.4, if (i) the Issuer shall default in the
payment of any principal of, premium, if any, or interest, if any, on any
Senior Indebtedness when the same becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration of acceleration or
otherwise, or (ii) any other default shall occur with respect to Senior
Indebtedness and the maturity of such Senior Indebtedness has been accelerated
in accordance with its terms, then, upon written notice of such default to the
Issuer and the Trustee by the holders of Senior Indebtedness or any trustee
therefor, unless and until, in either case, the default has been cured or
waived, or has ceased to exist, or any such acceleration has been rescinded or
such Senior Indebtedness has been paid in full, no direct or indirect payment
(in cash, property, securities, by set-off or otherwise) shall be made or
agreed to be made on account of the principal of, premium, if any, or
interest, if any, on any of the Securities, or in respect of any redemption,
retirement, purchase or other acquisition of any of the Securities other than
those made in capital stock of the Issuer (or cash in lieu of fractional
shares thereof).
(c) If any default (other than a default described in paragraph (b)
of this Section 13.1) shall occur under the Senior Indebtedness, pursuant to
which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods occurs (a "Senior Nonmonetary
Default"), then, upon the receipt by the Issuer and the Trustee of written
notice thereof (a "Payment Notice") from or on behalf of holders of such
Senior Indebtedness specifying an election to prohibit such payment and other
action by the Issuer in accordance with the following provisions of this
paragraph (c), the Issuer may not make any payment or take any other action
that would be prohibited by paragraph (b) of this Section 13.1 during the
period (the "Payment Blockage Period") commencing on the date of receipt of
such Payment Notice and ending on the earlier of (i) the date, if any, on
which the holders of such Senior Indebtedness or their representative notify
the Trustee that such Senior Nonmonetary Default is cured or waived or ceases
to exist or the Senior Indebtedness to which such Senior Nonmonetary Default
relates is discharged or (ii) the 179th day after the date of receipt of such
Payment Notice. Notwithstanding the provisions described in the immediately
preceding sentence, the Issuer may resume payments on the Securities following
such Payment Blockage Period. Any number of Payment Notices may be given;
provided, however, that (i) not more than one Payment Notice shall be given
within a period of any 360 consecutive days, and (ii) no default that existed
upon the date of such Payment Notice or the commencement of such Payment
Blockage Period (whether or not such event of default is on the same issue of
Senior Indebtedness) shall be made the basis for the commencement of any other
Payment Blockage Period.
(d) If (i) (A) without the consent of the Issuer, a receiver,
conservator, liquidator or trustee of the Issuer or of any of its property is
appointed by the order or decree of any court or agency or supervisory
authority having jurisdiction, and such decree or order remains in effect for
more than 60 days or (B) the Issuer is adjudicated bankrupt or insolvent or
(C) any of its property is sequestered by court order and such order remains
in effect for more than 60 days or (D) a petition is filed against the Issuer
under any state or federal bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, liquidation or receivership law
of any jurisdiction whether now or hereafter in effect (including without
limitation the Bankruptcy Code), and is not dismissed within 60 days after
such filing; or (ii) the Issuer (A) commences a voluntary case or other
proceeding seeking liquidation, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or other relief with respect to
itself or its debt or
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other liabilities under any bankruptcy, insolvency or other similar law now or
hereafter in effect (including without limitation the Bankruptcy Code) or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or (B)
consents to any such relief or to the appointment of or taking possession by
any such official in an involuntary case or other proceeding commenced against
it, or (C) fails generally to, or cannot, pay its debts generally as they
become due or (D) takes any corporate action to authorize or effect any of the
foregoing; or (iii) any Subsidiary of the Issuer takes, suffers or permits to
exist any of the events or conditions referred to in the foregoing clause (i)
or (ii), then all Senior Indebtedness (including any interest thereon accruing
after the commencement of any such proceedings) shall first be paid in full
before any payment or distribution, whether in cash, securities or other
property, shall be made to any Holder of any Securities on account thereof.
Any payment or distribution, whether in cash, securities or other property
(other than securities of the Issuer or any other corporation provided for by
a plan of reorganization or readjustment the payment of which is subordinate,
at least to the extent provided in these subordination provisions with respect
to the indebtedness evidenced by the Securities to the payment of all Senior
Indebtedness then outstanding and to any securities issued in respect thereof
under any such plan of reorganization or adjustment) which would otherwise
(but for these subordination provisions) be payable or deliverable in respect
of the Securities of any series shall be paid or delivered directly to the
holders of Senior Indebtedness in accordance with the priorities then existing
among such holders until all Senior Indebtedness (including any interest
thereon accruing after the commencement of any such proceedings) shall have
been paid in full. In the event of any such proceeding, after payment in full
of all sums owing with respect to Senior Indebtedness, the Holders of the
Securities, together with the holders of any obligations of the Issuer ranking
on a parity with the Securities, shall be entitled to be paid from the
remaining assets of the Issuer the amounts at the time due and owing on
account of unpaid principal of and interest, if any, on the Securities and
such other obligations before any payment or other distribution, whether in
cash, property or otherwise, shall be made on account of any capital stock or
any obligations of the Issuer ranking junior to the Securities and such other
obligations.
(e) If, notwithstanding the foregoing, any payment or distribution of
any character, whether in cash, securities or other property (other than
securities of the Issuer or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least
to the extent provided in the subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness then outstanding and to any securities issued in respect thereof
under any such plan of reorganization or readjustment), shall be received by
the Trustee or any Holder in contravention of any of the terms hereof, such
payment or distribution of securities shall be received in trust for the
benefit of and shall be paid over or delivered and transferred to the holders
of the Senior Indebtedness then outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full. In the event of the failure of the Trustee or any Holder
to endorse or assign any such payment, distribution or security, each holder
of such Senior Indebtedness is hereby irrevocably authorized to endorse or
assign the same.
(f) No present or future holder of any Senior Indebtedness shall be
prejudiced in the right to enforce subordination of the indebtedness evidenced
by the Securities by any act or failure to act on the part of the Issuer or
any Holder of Securities. Nothing contained herein shall
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impair, as between the Issuer and the Holders of Securities of each series,
the obligation of the Issuer to pay to such Holders the principal of and
interest, if any, on such Securities or prevent the Trustee or the Holder from
exercising all rights, powers and remedies otherwise permitted by applicable
law or hereunder upon a default or Event of Default hereunder, all subject to
the rights of the holders of the Senior Indebtedness to remove cash,
securities or other property otherwise payable or deliverable to the Holders.
(g) Senior Indebtedness shall not be deemed to have been paid in full
unless the holders thereof shall have received cash, securities or other
property equal to the amount of such Senior Indebtedness then outstanding.
Upon the payment in full of all Senior Indebtedness, the Holders of Securities
of each series shall be subrogated to all rights of any holders of Senior
Indebtedness to receive any further payment or distributions applicable to the
Senior Indebtedness until the indebtedness evidenced by the Securities of such
series shall have been paid in full and such payments or distributions
received by such Holders, by reason of such subrogation, of cash, securities
or other property which otherwise would be paid or distributed to the holders
of Senior Indebtedness, shall, as between the Issuer and its creditors other
than the holders of Senior Indebtedness, on the one hand, and such Holders, on
the other hand, be deemed to be a payment by the Issuer on account of Senior
Indebtedness, and not on account of the Securities of such series.
(h) The provisions of this Section 13.1 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Issuer in respect
of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
(i) The securing of any obligations of the Issuer, otherwise ranking
on a parity with the Securities, shall not be deemed to prevent such
obligations from constituting, respectively, obligations ranking on a parity
with the Securities.
SECTION 13.2. Reliance on Certificate of Liquidating Agent; Further
Evidence as to Ownership of Senior Indebtedness. Upon any payment or
distribution of assets of the Issuer, the Trustee and the Holders shall be
entitled to rely upon an order or decree issued by any court of competent
jurisdiction in which such dissolution or winding up or liquidation or
reorganization or arrangement proceedings are pending or upon a certificate of
the bankruptcy trustee, receiver, assignee for the benefit of creditors or
other Person making such payment or distribution, delivered to the Trustee or
to the Holders, for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Issuer, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Thirteen. In the absence of any such bankruptcy
trustee, receiver, assignee or other Person, the Trustee shall be entitled to
rely upon written notice by a Person representing himself to be a holder of
Senior Indebtedness (or a trustee or representative on behalf of such holder)
as evidence that such Person is a holder of Senior Indebtedness (or is such a
trustee or representative). If the Trustee determines, in good faith, that
further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distributions
pursuant to this Article Thirteen, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, as to the extent to which
such Person is entitled to participate in such payment or distribution, and to
other
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facts pertinent to the rights of such Person under this Article Thirteen, and
if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to
receive such payment.
SECTION 13.3. Payment Permitted If No Default. Nothing contained in
this Article Thirteen or elsewhere in this Indenture, or in any of the
Securities, shall prevent (a) the Issuer at any time, except during the
pendency of any default with respect to Senior Indebtedness described in
Section 13.1(b) or Section 13.1(c) or of any of the events described in
Section 13.1(d), from making payments of the principal of or interest, if any,
on the Securities, or (b) the application by the Trustee or any paying agent
of any moneys deposited with it hereunder to payments of the principal of or
interest, if any, on the Securities, if, at the time of such deposit, the
Trustee or such paying agent, as the case may be, did not have the written
notice provided for in Section 13.5 of any event prohibiting the making of
such deposit, or if, at the time of such deposit (whether or not in trust) by
the Issuer with the Trustee or paying agent (other than the Issuer) such
payment would not have been prohibited by the provisions of this Article
Thirteen, and the Trustee or any paying agent shall not be affected by any
notice to the contrary received by it on or after such date.
SECTION 13.4. Disputes with Holders of Certain Senior Indebtedness.
Any failure by the Issuer to make any payment on or under any Senior
Indebtedness, other than any Senior Indebtedness as to which the provisions of
this Section 13.4 shall have been waived by the Issuer in the instrument or
instruments by which the Issuer incurred, assumed, guaranteed or otherwise
created such Senior Indebtedness, shall not be deemed a default under Section
13.1 hereof if (i) the Issuer shall be disputing its obligation to make such
payment or perform such obligation, and (ii) either (A) no final judgment
relating to such dispute shall have been issued against the Issuer which is in
full force and effect and is not subject to further review, including a
judgment that has become final by reason of the expiration of the time within
which a party may seek further appeal or review, or (B) if a judgment that is
subject to further review or appeal has been issued, the Issuer shall in good
faith be prosecuting an appeal or other proceeding for review, and a stay of
execution shall have been obtained pending such appeal or review.
SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition.
Anything in this Article Thirteen or elsewhere in this Indenture contained to
the contrary notwithstanding, the Trustee shall not at any time be charged
with knowledge of the existence of any facts which would prohibit the making
of any payment of moneys to or by the Trustee and shall be entitled to assume
conclusively that no such facts exist and that no event specified in clauses
(b) and (c) of Section 13.1 has happened unless and until the Trustee shall
have received an Officers' Certificate to the effect or notice in writing to
that effect signed by or on behalf of the holder or holders, or the
representatives, of Senior Indebtedness who shall have been certified by the
Issuer or otherwise established to the reasonable satisfaction of the Trustee
to be such holder or holders or representatives or from any trustee under any
indenture pursuant to which such Senior Indebtedness shall be outstanding;
provided, however, that, if the Trustee shall not have received the Officers'
Certificate or notice provided for in this Section 13.5 at least three
Business Days preceding the date upon which by the terms hereof any moneys
become payable for any purpose (including, without limitation, the payment of
either the principal of or interest, if any, on any Security), then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to receive such moneys and apply the same to the purpose
for which
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they were received and shall not be affected by any notice to the contrary
that may be received by it within three Business Days preceding such date. The
Issuer shall give prompt written notice to the Trustee and to each paying
agent of any facts that would prohibit any payment of moneys to or by the
Trustee or any paying agent, and the Trustee shall not be charged with
knowledge of the curing of any default or the elimination of any other fact or
condition preventing such payment or distribution unless and until the Trustee
shall have received an Officers' Certificate to such effect.
SECTION 13.6. Trustee to Effectuate Subordination. Each Holder of
Securities by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate
the subordination as between such Holder and holders of Senior Indebtedness as
provided in this Article Thirteen and appoints the Trustee its
attorney-in-fact for any and all such purposes.
SECTION 13.7. Rights of Trustee as Holder of Senior Indebtedness. The
Trustee shall be entitled to all the rights set forth in this Article Thirteen
with respect to any Senior Indebtedness which may at the time be held by it,
to the same extent as any other holder of Senior Indebtedness and nothing in
this Indenture shall deprive the Trustee of any of its rights as such holder.
Nothing in this Article Thirteen shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.6.
SECTION 13.8. Article Applicable to Paying Agents. In case at any
time any paying agent other than the Trustee shall have been appointed by the
Issuer and be then acting hereunder, the term "Trustee" as used in this
Article Thirteen shall in such case (unless the context shall otherwise
require) be construed as extending to and including such paying agent within
its meaning as fully for all intents and purposes as if the paying agent were
named in this Article Thirteen in addition to or in place of the Trustee;
provided, however, that Sections 13.5 and 13.7 shall not apply to the Issuer
if it acts as paying agent.
SECTION 13.9. Subordination Rights Not Impaired by Acts or Omissions
of the Issuer or Holders of Senior Indebtedness. No right of any present or
future holders of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Issuer or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Issuer with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with. The
holders of Senior Indebtedness, may at any time or from time to time and in
their absolute direction, change the manner, place or terms of payment, change
or extend the time of payment of, or renew or alter, any such Senior
Indebtedness, or amend or supplement any instrument pursuant to which any such
Senior Indebtedness is issued or by which it may be secured, or release any
security therefor, or exercise or refrain from exercising any other of their
rights under such Senior Indebtedness, including, without limitation, the
waiver of default thereunder, all without notice to or assent from the Holders
of the Securities or the Trustee and without affecting the obligations of the
Issuer, the Trustee or the Holders of Securities under this Article Thirteen.
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of the Senior
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Indebtedness, and shall not be liable to any such holders if it shall
mistakenly pay over or distribute money or assets to Securityholders or the
Issuer. With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants or obligations
as are specifically set forth in this Article Thirteen and no implied
covenants or obligations with respect to holders of Senior Indebtedness shall
be read into this Indenture against the Trustee.
ARTICLE FOURTEEN
SUBORDINATED GUARANTEE
SECTION 14.1. Applicability of Article. The provisions of this
Article shall be applicable to each of the Guarantors specified pursuant to
Section 2.3 for the Guarantee of Securities of a series.
SECTION 14.2. Guarantee. Each Guarantor of a particular series of
Securities hereby unconditionally guarantees (each such guarantee to be
referred to herein as a "Guarantee"), jointly and severally with each other
Guarantor of the Securities of that series, if any, to each Holder of such
Securities authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
this Indenture, such Securities or the obligations of the Company hereunder or
thereunder, (i) the due and punctual payment of the principal of and any
premium or interest on such Securities, whether at maturity or on an interest
payment date, by acceleration, pursuant to an offer to purchase such
Securities or otherwise, and interest on the overdue principal of and
interest, if any, on such Securities, if lawful, and all other obligations of
the Company to the Holders of such Securities or the Trustee hereunder or
thereunder shall be promptly paid in full, all in accordance with the terms
hereof and thereof including all amounts payable to the Trustee under Section
6.6 hereof, and (ii) in case of any extension of time of payment or renewal of
any such Securities or any of such other obligations, the same shall be
promptly paid in full when due or to be performed in accordance with the terms
of the extension or renewal, whether at stated maturity, by acceleration or
otherwise.
If the Company fails to make any payment when due of any amount so
guaranteed for whatever reason, the Guarantor of the Securities of that series
shall be obligated, jointly and severally with each other Guarantor, if any,
to pay the same immediately. Each Guarantor hereby agrees that its obligations
hereunder shall be continuing, absolute and unconditional, irrespective of,
and shall be unaffected by, the validity, regularity or enforceability of the
Securities, this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Securities or the Trustee with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of such
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, demand of performance, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding
first against the Company, the benefit of discussion, protest, notice and all
demand whatsoever and covenants that its Guarantee shall not be discharged
except by complete performance of the obligations contained in the Securities
guaranteed by such Guarantee, in this Indenture and in this Article 14. If any
Holder of Securities of a series guaranteed hereby or the Trustee is required
by any court or otherwise to return to the
62
Company or any Guarantor of such Securities, or any custodian, trustee,
liquidator or other similar official acting in relation to the Company or any
Guarantor, any amount paid by the Company or any Guarantor of such Securities
to the Trustee or such Holder, this Article 13, to the extent theretofore
discharged with respect to any Guarantee of such Securities, shall be
reinstated in full force and effect. Each Guarantor agrees that it shall not
be entitled to any right of subrogation in relation to the Holders of
Securities of a series guaranteed hereby by such Guarantor in respect of any
obligations guaranteed hereby by such Guarantee until payment in full of all
such obligations. Each Guarantor further agrees that, as between such
Guarantor, on the one hand, and the Holders of Securities of a series
guaranteed hereby by such Guarantor and the Trustee on the other hand, (i) the
maturity of the obligations guaranteed hereby may be accelerated as provided
in Article 5 hereof for the purposes of such Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect
of the obligations guaranteed hereby and (ii) in the event of any acceleration
of such obligations as provided in Article 5 hereof such obligations (whether
or not due and payable) shall forthwith become due and payable by such
Guarantor, jointly severally with any other Guarantor of such Securities, for
the purpose of this Article 14. In addition, without limiting the foregoing,
upon the effectiveness of an acceleration under Article 5, the Trustee may
make a demand for payment on the Securities under any Guarantee provided
hereunder and not discharged.
With respect to each Guarantee by a Guarantor, such Guarantor shall
be subrogated to all rights of the Holder of any Securities guaranteed hereby
by such Guarantee against the Company in respect of any amounts paid to such
Holder by such Guarantor pursuant to the provisions of such Guarantee;
provided that the 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 and interest on all such Securities shall have been paid in full.
The Guarantee set forth in this Section 14.1 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by the
Trustee or any duly appointed agent.
The Guarantees provided in this Section 14.1 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by the
Trustee or any duly appointed agent.
SECTION 14.3. Guarantee Subordinated to Senior Debt of the Guarantor.
Each Guarantor agrees, and each Holder of the Securities by his
acceptance thereof likewise agrees, that the payments pursuant to the
Guarantee by each Guarantor shall be subordinated in accordance with the
following provisions of this Article 14 to the prior payment in full of all
Senior Debt of each Guarantor.
"Senior Debt of each Guarantor" means the Principal of and interest
on:
(1) all indebtedness for money borrowed by each Guarantor or which
is evidenced by a bond, debenture, note or other similar instrument or
agreement whether or not for money borrowed;
(2) lease obligations of the Guarantor;
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(3) all indebtedness, secured or unsecured, in connection with the
acquisition or improvement of any property or asset or the acquisition of
any business by the Guarantor;
(4) all indebtedness secured by any mortgage, lien, pledge, charge
or encumbrance upon property owned by the Guarantor and all indebtedness
secured in the manner specified in this clause (4) even if a Guarantor
has not assumed or become liable for the payment thereof;
(5) all customer deposits held by each Guarantor in escrow accounts
pending closing of the related sales;
(6) all indebtedness of each Guarantor created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by each Guarantor or otherwise representing the
deferred and unpaid balance of the purchase price of any such property,
including all indebtedness created or arising in the manner specified in
this clause (6) even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property;
(7) guarantees by each Guarantor, direct or indirect, of any
indebtedness of another Person of the types referred to in clauses (1),
(2), (3), (4), (5) or (6); and
(8) contingent obligations of the Guarantor in respect of, or to
purchase or otherwise acquire or be responsible or liable for through the
purchase of products or services, irrespective of whether such products
are delivered or such services are rendered, any such indebtedness
referred to in clauses (1), (2), (3), (4), (5) or (6),
which indebtedness, lease obligation, deposit, guarantee or contingent
obligation each Guarantor has directly or indirectly created, incurred,
assumed, guaranteed or otherwise become liable or responsible for, whether
currently outstanding or hereafter created. All references to indebtedness
include any renewals, extensions, refundings, amendments and modifications of
any such indebtedness issued in exchange for such indebtedness; provided,
however, that Senior Debt of each Guarantor shall not include, without
limitation (i) a Guarantee, (ii) the guarantee by each Guarantor of the
Subordinated Notes, (iii) accounts payable or any other indebtedness to trade
creditors created or assumed by each Guarantor in the ordinary course of
business in connection with the obtaining of materials or services, (iv) any
liability for federal, state or local taxes owed or owing by each Guarantor
and (v) any indebtedness as to which, in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is provided that
such indebtedness is on a parity with or otherwise not superior in right of
payment to a Guarantee.
This Article 14 shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Debt of each Guarantor, and such provisions are made for the benefit of
the holders of Senior Debt of the Guarantor, and
64
such holders are made obligees hereunder and any one or more of them may
enforce such provisions.
SECTION 14.4. Guarantors Not to Make Payments With Respect to
Securities in Certain Circumstances.
(a) Upon the maturity of the principal of any Senior Debt of each
Guarantor (other than payment of sinking fund installments) by lapse of time,
acceleration or otherwise, all principal thereof and interest thereon shall
first be paid in full, or such payment duly provided for in cash or in a
manner satisfactory to the holders of such Senior Debt of each Guarantor,
before any payment, pursuant to the Guarantee, is made on account of the
principal or interest on the Securities or to acquire any of the Securities or
on account of the mandatory redemption provisions in the Securities (except
mandatory redemption payments made in respect of Securities acquired by each
Guarantor before the maturity of such Senior Debt of each Guarantor).
(b) Unless Section 14.4 shall be applicable, upon (1) the occurrence
of a Payment Default with respect to Senior Debt of each Guarantor and receipt
by each Guarantor and the Trustee of written notice of such occurrence or (2)
upon the acceleration of such indebtedness, then no payment or distribution of
any assets of each Guarantor of any kind or character shall be made by each
Guarantor or the Trustee on account of principal of (or premium, if any) or
interest on the Securities or on account of the purchase or redemption or
other acquisition of Securities, unless and until such Payment Default shall
have been cured or waived in writing or shall have ceased to exist or such
Senior Debt of each Guarantor shall have been discharged, after which each
Guarantor shall resume making any and all required payments in respect of the
Securities, including any missed payments.
(c) Unless Section 14.4 shall be applicable, upon (1) the occurrence
of a Non-Payment Default and (2) receipt by the Trustee of written notice of
such occurrence, then no payment or distribution of any assets of each
Guarantor of any kind or character shall be made by each Guarantor or the
Trustee on account of any principal of (or premium, if any) or interest on the
Securities or on account of the purchase or redemption or other acquisition of
Securities, for a period ("Payment Blockage Period") commencing on the earlier
of the date of receipt by the Trustee of such written notice from the holder
of Senior Debt of each Guarantor or of the Company, or any representative of a
holder of Senior Debt of each Guarantor or of the Company unless and until
(subject to any blockage of payment that may then be in effect under
subsection (a) of this Section) the earlier of (x) more than 120 days shall
have elapsed since receipt of such written notice by each Guarantor or the
Trustee, whichever was earlier, (y) such Non-Payment Default shall have been
cured or waived in writing or shall have ceased to exist or such Senior Debt
of each Guarantor or of the Company shall have been discharged or (z) such
Payment Blockage Period shall have been terminated by written notice to each
Guarantor or to the Company, as the case may be, or to the Trustee from the
holders of the Senior Debt of each Guarantor or of the Company or any
representative of the holders of the Senior Debt of each Guarantor or of the
Company initiating such Payment Blockage Period, after which, in the case of
clause (x), (y) or (z), each Guarantor shall promptly resume making any and
all required payments in respect of the Securities, including any missed
payments. In no event shall a Payment Blockage Period extend beyond 120 days
from the date of the receipt by the Trustee of
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the notice referred to in clause (2) hereof (the "Initial Period"). Any number
of additional Payment Blockage Periods may be commenced during the Initial
Period; provided, however, that no such additional period shall extend beyond
the Initial Period. After the expiration of the Initial Period, no Payment
Blockage Period may be commenced on the basis of a Non-Payment Default on the
Senior Debt which was the basis of a Payment Blockage Period commenced during
the Initial Period until at least 270 consecutive days have elapsed from the
last day of the Initial Period. No Non-Payment Default which existed or was
continuing on the date of the commencement of any Payment Blockage Period and
of which the applicable Senior Debt holder(s) are aware shall be, or be made,
the basis for the commencement of a second Payment Blockage Period whether or
not within a period of 270 consecutive days unless such event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
(d) In the event that notwithstanding the provisions of this Section
14.3 each Guarantor shall make, pursuant to this Guarantee, any payment or
distribution of any character to the Trustee on account of the principal of or
interest on the Securities, or on account of the mandatory redemption
provisions, after the happening of an event of default with respect to any
Senior Debt of each Guarantor based on a default in the payment of the
principal or interest on Senior Debt of each Guarantor, or after receipt by
the Trustee of written notice as provided in this Section 14.3 of an Event of
Default with respect to any Senior Debt of each Guarantor, or after the
acceleration of the Securities of any series pursuant to Section 5.1, then,
but only if the Trustee is in receipt of the notice specified in Section 14.7,
unless and until such default or event of default shall have been cured or
waived or shall have ceased to exist, or such acceleration shall have been
rescinded, such payment (subject to the provisions of Sections 14.7 and 14.8)
shall be held by the Trustee in trust for the benefit of, and, if the Senior
Debt of each Guarantor shall have been declared immediately due and payable,
shall be paid forthwith over and delivered to, the holders of Senior Debt of
each Guarantor (pro rata as to each of such holders on the basis of the
respective amounts of Senior Debt of each Guarantor held by them) or their
representative or the trustee under the indenture or other agreement (if any)
pursuant to which Senior Debt of each Guarantor may have been issued, as their
respective interests may appear, such payments to be made in accordance with
an Officers' Certificate as provided in Section 11.5 (on which the Trustee may
conclusively rely) identifying all holders of Senior Debt of each Guarantor
and the principal amount of Senior Debt of each Guarantor then outstanding
held by each and stating the reasons why such Officers' Certificate is being
delivered to the Trustee, for application to the payment of all Senior Debt of
each Guarantor remaining unpaid to the extent necessary to pay all Senior Debt
of each Guarantor in full in accordance with its terms, after giving effect to
any concurrent payment or distribution to or for the holders of Senior Debt of
each Guarantor. In the event of the failure of any Holder of a Security to
endorse or assign any such payment or distribution, each holder of Senior Debt
of each Guarantor is hereby irrevocably authorized to endorse or assign the
same. Each Guarantor shall give prompt notice to the Trustee of any default
under any Senior Debt of each Guarantor or under any agreement pursuant to
which Senior Debt of each Guarantor may have been issued, as required by
Section 3.5.
SECTION 14.5. Guarantee Subordinated to Prior Payment of All Senior
Debt of a Guarantor on Dissolution, Winding Up, Liquidation or Reorganization
of the Guarantor.
In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to a Guarantor, its
66
creditors or its property, (ii) any case or proceeding for the liquidation,
dissolution or other winding-up of a Guarantor, voluntary or involuntary,
whether or not involving insolvency or bankruptcy proceedings, (iii) any
assignment by such Guarantor for the benefit of creditors, or (iv) any other
marshalling of the assets of such Guarantor:==
(a) the holders of all Senior Debt of such Guarantor shall first be
entitled to receive payment in full (or to have such payment
duly provided for) of the principal and interest due thereon
(including any interest thereon accruing after commencement of
any such proceeding) before the Holders of the Securities are
entitled to receive, pursuant to this Guarantee any payment or
any distribution, whether in cash, securities or other
property, on account of the principal or interest on the
Securities;
(b) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities
(other than securities of such Guarantor as reorganized or
readjusted or securities of such Guarantor or any other
company, trust or corporation provided for by a plan of
reorganization or readjustment, junior or the payment of which
is otherwise subordinate, at least to the extent provided in
this Article, to the payment of all Senior Debt of such
Guarantor at the time outstanding and to the payment of all
securities issued in exchange therefor to the holders of the
Senior Debt of such Guarantor at the time outstanding), to
which the Holders of the Securities or the Trustee on behalf of
the Holders of the Securities would be entitled, pursuant to
this Guarantee except for the provisions of this Article 14.4,
including any such payment or distribution which may be payable
or deliverable by reason of the payment of any other
indebtedness of such Guarantor being subordinated to the
payment of the Securities, shall be paid by the liquidating
trustee or agent or other person making such payment or
distribution directly to the holders of Senior Debt of such
Guarantor or their representative(s), or to the trustee under
any indenture under which Senior Debt of such Guarantor may
have been issued (pro rata as to each such holder,
representative or trustee on the basis of the respective
amounts of unpaid Senior Debt of such Guarantor held or
represented by each), to the extent necessary to make payment
in full of all Senior Debt of such Guarantor remaining unpaid
after giving effect to any concurrent payment or distribution
or provision therefor to the holders of such Senior Debt of
such Guarantor; and
(c) in the event that notwithstanding the foregoing provisions of
this Section 14.4, any payment or distribution of assets of
such Guarantor of any kind or character, whether in cash,
property or securities shall be received, pursuant to the
Guarantee, by the Trustee or the Holders of the Securities on
account of principal or interest on the Securities before all
Senior Debt of such Guarantor is paid in full, or effective
provisions made for its payment, such payment or
distribution (subject to the provisions of Sections 14.7 and
14.8) shall be received and held in trust for and shall be paid
over or delivered to the liquidating trustee, agent or other
person making such payment or
67
distribution or to the holders of the Senior Debt of such
Guarantor remaining unpaid or unprovided for or their
representative, or to the trustee under any indenture under
which Senior Debt of such Guarantor may have been issued (pro
rata as provided in subsection (b) above), for application to
the payment of such Senior Debt of such Guarantor until all
such Senior Debt of such Guarantor shall have been paid in
full, after giving effect to any concurrent payment or
distribution or provision therefor to the holders of such
Senior Debt of such Guarantor.
If a Guarantor effects a transaction permitted by Article Nine, such
transaction shall not be deemed to be a dissolution, winding up, liquidation
or reorganization of such Guarantor for purposes of this Section.
A Guarantor shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of such Guarantor,
assignment for the benefit of creditors by such Guarantor or any other
marshalling of assets of such Guarantor.
SECTION 14.6. Holders to be Subrogated to Rights of Holders of Senior
Debt of each Guarantor.
Subject to the payment in full of all Senior Debt of each Guarantor,
the Holders of the Securities shall be subrogated to the rights of the holders
of Senior Debt of each Guarantor to receive payments or distributions of
assets of each Guarantor applicable to the Senior Debt of each Guarantor until
all amounts owing under the Guarantee shall be paid in full and for the
purpose of such subrogation no payments or distributions to the holders of
Senior Debt of each Guarantor by virtue of this Article 14 which otherwise
would have been made to the Holders of the Securities, shall, as between each
Guarantor, its creditors other than holders of its Senior Debt of each
Guarantor and the Holders, be deemed to be a payment by each Guarantor to or
on account of the Senior Debt of each Guarantor, it being understood that the
provisions of this Article 14 are solely for the purpose of defining the
relative rights of the holders of Senior Debt of the Guarantors on the one
hand and the Holders on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article shall have been
applied, pursuant to the provisions of this Article, to the payment of Senior
Debt of each Guarantor, then and in such case, the Holders shall be entitled
to receive from the holders of such Senior Debt of each Guarantor at the time
outstanding any payments or distributions received by such holders of such
Senior Debt of each Guarantor in excess of the amount sufficient to pay all
amounts payable under or in respect of such Senior Debt of each Guarantor in
full.
SECTION 14.7. Obligations of Each Guarantor Unconditional.
Nothing contained in this Article 14 or elsewhere in this Indenture
or in any Security is intended to or shall impair, as between a Guarantor and
the Holders, the obligations of the Guarantor, which are absolute and
unconditional, to pay to the Holders the principal of and interest on the
Securities as and when the same shall become due and payable in accordance
with the provisions of this Guarantee or is intended to or shall affect the
relative rights of the Holders
68
and creditors of a Guarantor other than the holders of the Senior Debt of such
Guarantor, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
Default under this Indenture, subject to the rights, if any, under this
Article 14 of the holders of Senior Debt of a Guarantor in respect of cash,
property or securities of such Guarantor received upon the exercise of any
such remedy.
Upon any distribution of assets of a Guarantor referred to in this
Article 14, the Trustee, subject to the provisions of Sections 6.1 and 6.2,
and the Holders of the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other person making any
distribution to the Trustee or to the Holders of the Securities, for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Debt and other indebtedness of each
Guarantor, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this
Article 14.
SECTION 14.8. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee, and the Trustee shall not be required to withhold payment to the
Holders of Securities as provided in Section 14.3(d), unless and until the
Trustee shall have received written notice thereof at its Corporate Trust
Office from a Guarantor or from one or more holders of Senior Debt of such
Guarantor or from any representative thereof or trustee therefor identifying
the specific sections of this Indenture involved and describing in detail the
facts that would obligate the Trustee to withhold payments to Holders of
Securities, as well as any other facts required by the next succeeding
paragraph of this Section 14.7; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Sections 6.1 and 6.2, shall
be entitled to assume conclusively that no such facts exist.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing himself to be a holder of Senior Debt
of a Guarantor (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Debt of such Guarantor or a
trustee on behalf of any such holder. In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of
any person as a holder of Senior Debt of a Guarantor to participate in any
payment or distribution pursuant to this Article 14, the Trustee may request
such person to furnish evidence to the reasonable satisfaction of the Trustee
as to the amount of Senior Debt of such Guarantor held by such person, the
extent to which such person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such person under
this Article 14, and if such evidence is not furnished the Trustee may defer
any payment to such person pending judicial determination as to the right of
such person to receive such payment.
SECTION 14.9. Application by Trustee of Monies Deposited with It.
69
Except as provided in Section 10 any deposit of monies by a Guarantor
with the Trustee or any Paying Agent (whether or not in trust) for the payment
of the principal or interest on any Securities shall be subject to the
provisions of Sections 14.2, 14.3, 14.4 and 14.5 except that, if prior to the
opening of business on the date on which by the terms of this Indenture any
such monies may become payable for any purpose (including, without limitation,
the payment, pursuant to this Guarantee, of either the principal or the
interest on any Security) the Trustee shall not have received with respect to
such monies the notice provided for in Section 14.7, then the Trustee shall
have full power and authority to receive such monies and to apply the same to
the purpose for which they were received and shall not be affected by any
notice to the contrary which may be received by it on or after such date,
without, however, limiting any rights that holders of Senior Debt of a
Guarantor may have to recover any such payments from the Holders in accordance
with the provisions of this Article.
SECTION 14.10. Subordination Rights Not Impaired by Acts or Omissions
of a Guarantor or Holders of Senior Debt of such Guarantor.
No right of any present or future holders of any Senior Debt of a
Guarantor to enforce subordination as provided herein shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of such
Guarantor or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by such Guarantor with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Debt of such Guarantor may
extend, renew, modify or amend the terms of the Senior Debt of such Guarantor
or any security therefor and release, sell or exchange such security and
otherwise deal freely with such Guarantor, all without affecting the
liabilities and obligations of the parties to this Indenture or the Holders.
SECTION 14.11. Holders Authorize Trustee to Effectuate Subordination
of Securities.
Each Holder of the Securities by his acceptance thereof authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article 14 and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of a Guarantor (whether in bankruptcy, insolvency or
receivership proceedings, voluntary liquidation or upon assignment for the
benefit of creditors or otherwise) tending towards liquidation of the business
and assets of the Guarantor, the timely filing of a claim for the unpaid
balance, pursuant to this Guarantee, of its or his Securities in the form
required in said proceedings and cause said claim to be approved. If the
Trustee does not file a proper claim or proof of debt in the form required in
such proceeding on or prior to 30 days before the expiration of the time to
file such claim or claims, then the holders of Senior Debt of the Guarantor
have the right to file and are hereby authorized to file an appropriate claim
for and on behalf of the Holders of said Securities.
SECTION 14.12. Right of Trustee to Hold Senior Debt of a Guarantor.
The Trustee in its individual capacity, shall be entitled to all of
the rights set forth in this Article 14 in respect of any Senior Debt of a
Guarantor at any time held by it to the same
70
extent as any other holder of such Senior Debt of a Guarantor, and nothing in
this Indenture shall be construed to deprive the Trustee of any of its rights
as such holder.
SECTION 14.13. Trustee Not Fiduciary for Holders of Senior Debt of a
Guarantor.
With respect to the holders of Senior Debt of a Guarantor, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article 14, and no implied
covenants or obligations with respect to the holders of Senior Debt of a
Guarantor shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior Debt of
a Guarantor and the Trustee shall not be liable to any holder of Senior Debt
of a Guarantor if it shall pay over or deliver to Holders of Securities, a
Guarantor or any other person monies or assets to which any holder of Senior
Debt of such Guarantor shall be entitled by virtue of this Article 14 or
otherwise.
SECTION 14.14. Article 14 Not To Prevent Events of Default.
The failure to make a payment on account of principal or interest on
the Securities of any series by reason of any provision in this Article 14
shall not be construed as preventing the occurrence of an Event of Default
under Section 5.1.
SECTION 14.15. Execution and Delivery of Guarantee. To evidence a
Guarantee set forth in this Article 14, the Guarantor hereby agrees that the
Guarantee Notation, substantially in the form of Exhibit A hereto, shall be
endorsed on each Security authenticated and delivered by the Trustee that is
guaranteed by such Guarantee and that this Indenture shall be executed on
behalf of such Guarantor by its Chairman of the Board, its President or one of
its Vice Presidents under a facsimile of its seal reproduced thereon.
Each Guarantor hereby agrees that its Guarantee shall remain in full
force and effect notwithstanding any failure to endorse the Guarantee Notation
on each such Security.
If an officer whose signature is on this Indenture or on the
Securities guaranteed hereby no longer holds that office at the time the
Trustee authenticates the Security on which a notation of the Guarantee is
endorsed, such Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of each Guarantee thereof.
SECTION 14.16. Subordination of Indebtedness Owed by the Company to a
Guarantor.
Any indebtedness owed by the Company to a Guarantor shall be
subordinate to all obligations of the Company with respect to the Securities
and this Indenture to the same extent as the Securities are subordinated to
Senior Debt of the Company.
SECTION 14.17. Officers' Certificate.
71
If there occurs an event referred to in the first sentence of Section
14.4(c) or the first sentence of Section 14.4, the applicable Guarantor shall
promptly give to the Trustee an Officers' Certificate (on which the Trustee
may conclusively rely) identifying all holders of Senior Debt of such
Guarantor and the principal amount of Senior Debt of such Guarantor then
outstanding held by each such holder and stating the reasons why such
Officers' Certificate is being delivered to the Trustee.
72
HOVNANIAN ENTERPRISES, INC.
ISSUER
By
------------------------------
[title]
[CORPORATE SEAL]
Attest:
- --------------------------------
Secretary
[CORPORATE SEAL]
FIRST UNION NATIONAL BANK, AS TRUSTEE
By
------------------------------
[title]
Attest:
- --------------------------------
Trust Officer
EXHIBIT A
[FORM OF NOTATION OF SECURITY
RELATING TO GUARANTEE]
GUARANTEE
[Name of Guarantor] (hereinafter referred to as the "Guarantor",
which term includes any successor person under the Indenture (the "Indenture")
referred to in the Security upon which this notation is endorsed) (the
"Endorsed Security"), has unconditionally guaranteed (i) the due and punctual
payment of the principal of, premium, if any, and interest on the Endorsed
Security and all other Securities of the same series as the Endorsed Security
(the "Guaranteed Securities"), whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal
of, premium, if any, and interest, if any, on the Guaranteed Securities, to
the extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders of Guaranteed Securities or the
Trustee all in accordance with the terms set forth in Article 14 of the
Indenture and (ii) in case of any extension of time of payment or renewal of
any Guaranteed Securities or any of such other obligations, that the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture.
The obligations of the Guarantor to the Holders of Guaranteed
Securities and to the Trustee pursuant to the Guarantee evidenced hereby and
the Indenture are expressly set forth in Article 14 of the Indenture and
reference is hereby made to such Indenture for the terms of such Guarantee.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any personal liability under
the Guarantee evidenced hereby by reason of his or its status as such
stockholder, officer, director or incorporator.
The Guarantee evidenced hereby shall not be valid or obligatory for
any purpose until the certificate of authentication of the Guaranteed
Securities shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
Guarantor
[SEAL]
[NAME OF GUARANTOR]
By_____________________
By_____________________
EXHIBIT B
[SUBSIDIARY GUARANTORS]
EXHIBIT 4.6
===============================================================================
K. HOVNANIAN ENTERPRISES, INC.
Issuer
and
HOVNANIAN ENTERPRISES, INC.
Guarantor
and
SUBSIDIARY GUARANTORS OF HOVNANIAN
Guarantors
and
FIRST UNION NATIONAL BANK,
as Trustee
----------------------------
INDENTURE
Dated as of ___________ ___, 2001
FORM OF SENIOR INDENTURE
===============================================================================
CROSS REFERENCE SHEET*
-----------
Provisions of Trust Indenture Act of 1939 and Indenture to be dated as of
_____ among K. HOVNANIAN ENTERPRISES, INC., HOVNANIAN ENTERPRISES, INC.,
SUBSIDIARY GUARANTORS OF HOVNANIAN and FIRST UNION NATIONAL BANK, as Trustee:
Section of the Act Section of Indenture
- ------------------ --------------------
310(a)(1), (2) and (5).......6.9
310(a)(3) and (4)............Inapplicable
310(b).......................6.8 and 6.10(a), (b) and (d)
310(c).......................Inapplicable
311(a).......................6.13
311(b).......................6.13
311(c).......................Inapplicable
312(a).......................4.1 and 4.2(a)
312(b).......................4.2(a) and (b)(i) and (ii)
312(c).......................4.2(c)
313(a).......................4.4(a)(i), (ii), (iii), (iv), (v), (vi) and (vii)
313(a)(5)....................Inapplicable
313(b)(1)....................Inapplicable
313(b)(2)....................4.4(b)
313(c).......................4.4(c)
313(d).......................4.4(d)
314(a).......................4.3
314(b).......................Inapplicable
314(c)(1) and (2)............11.5
314(c)(3)....................Inapplicable
314(d).......................Inapplicable
314(e).......................11.5
314(f).......................Inapplicable
315(a), (c) and (d)..........6.1
315(b).......................5.8
315(e).......................5.9
316(a)(1)....................5.7
316(a)(2)....................Not required
316(a)(last sentence)........7.4
316(b).......................5.4
317(a).......................5.2
317(b).......................3.5(a)
318(a).......................11.7
- ---------------------
*This Cross Reference Sheet is not part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE One DEFINITIONS.......................................................1
SECTION 1.1. Definitions..................................................1
ARTICLE Two SECURITIES........................................................8
SECTION 2.1. Forms Generally............................................8
SECTION 2.2. Form of Trustee's Certificate of Authentication............8
SECTION 2.3. Amount Unlimited, Issuable in Series.......................9
SECTION 2.4. Authentication and Delivery of Securities.................11
SECTION 2.5. Execution of Securities...................................14
SECTION 2.6. Certificate of Authentication.............................15
SECTION 2.7. Denomination and Date of Securities; Payments of Interest.15
SECTION 2.8. Registration, Transfer and Exchange.......................15
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen Securities.18
SECTION 2.10. Cancellation of Securities; Disposition Thereof...........18
SECTION 2.11. Temporary Securities......................................19
SECTION 2.12. CUSIP Numbers.............................................19
ARTICLE Three COVENANTS......................................................19
SECTION 3.1. Payment of Principal and Interest.........................19
SECTION 3.2. Offices for Notices and Payments, etc.....................19
SECTION 3.3. No Interest Extension.....................................20
SECTION 3.4. Appointments to Fill Vacancies in Trustee's Office........20
SECTION 3.5. Provision as to Paying Agent..............................20
SECTION 3.6. Limitation on Liens.......................................21
ARTICLE Four SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER, Hovnanian
AND THE TRUSTEE......................................................23
SECTION 4.1. Issuer and Hovnanian to Furnish Trustee Information
as to Names and Addresses of Securityholders......23
SECTION 4.2. Preservation and Disclosure of Securityholders Lists......23
SECTION 4.3. Reports by the Issuer and Hovnanian.......................25
SECTION 4.4. Reports by the Trustee....................................25
ARTICLE Five REMEDIES OF THE TRUSTEE AND SECURITY HOLDERS ON
EVENT OF DEFAULT.....................................................26
SECTION 5.1. Events of Default.........................................26
SECTION 5.2. Payment of Securities on Default; Suit Therefor...........28
SECTION 5.3. Application of Moneys Collected by Trustee................29
SECTION 5.4. Proceedings by Securityholders............................30
SECTION 5.5. Proceedings by Trustee....................................31
SECTION 5.6. Remedies Cumulative and Continuing........................31
Page
SECTION 5.7. Direction of Proceedings; Waiver of Defaults by
Majority of Securityholders..........................31
SECTION 5.8. Notice of Defaults........................................32
SECTION 5.9. Undertaking to Pay Costs..................................32
ARTICLE Six CONCERNING THE TRUSTEE...........................................32
SECTION 6.1. Duties and Responsibilities of the Trustee;
During Default; Prior to Default.....................32
SECTION 6.2. Certain Rights of the Trustee. Subject to Section 6.1:...33
SECTION 6.3. Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof........35
SECTION 6.4. Trustee and Agents May Hold Securities; Collections, etc..35
SECTION 6.5. Moneys Held by Trustee....................................35
SECTION 6.6. Compensation and Indemnification of Trustee and
Its Prior Claim......................................35
SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc....36
SECTION 6.8. Qualification of Trustee; Conflicting Interests...........36
SECTION 6.9. Persons Eligible for Appointment as Trustee;
Different Trustees for Different Series..............36
SECTION 6.10. Resignation and Removal; Appointment of
Successor Trustee....................................37
SECTION 6.11. Acceptance of Appointment by Successor Trustee............38
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee..................................39
SECTION 6.13. Preferential Collection of Claims Against the Issuer......39
SECTION 6.14. Appointment of Authenticating Agent.......................39
ARTICLE Seven CONCERNING THE SECURITYHOLDERS.................................40
SECTION 7.1. Evidence of Action Taken by Securityholders...............40
SECTION 7.2. Proof of Execution of Instruments and of Holding of
Securities...........................................41
SECTION 7.3. Holders to be Treated as Owners...........................41
SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding.........41
SECTION 7.5. Right of Revocation of Action Taken.......................42
SECTION 7.6. Record Date for Consents and Waivers......................42
ARTICLE Eight SUPPLEMENTAL INDENTURES........................................42
SECTION 8.1. Supplemental Indentures Without Consent of
Securityholders......................................42
SECTION 8.2. Supplemental Indentures with Consent of Securityholders...44
SECTION 8.3. Effect of Supplemental Indenture..........................45
SECTION 8.4. Documents to Be Given to Trustee..........................45
SECTION 8.5. Notation on Securities in Respect of
Supplemental Indentures..............................46
ARTICLE Nine CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR OTHER
DISPOSITION..........................................................46
SECTION 9.1. Consolidate Permitted, etc., on Certain Terms.............46
-ii-
SECTION 9.2. Successor Corporation to be Substituted...................46
SECTION 9.3. Opinion of Counsel to be Given Trustee....................47
ARTICLE Ten LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................47
SECTION 10.1. Applicability of Article.................................47
SECTION 10.2. Legal Defeasance And Discharge...........................47
SECTION 10.3. Covenant Defeasance......................................48
SECTION 10.4. Conditions To Legal Or Covenant Defeasance...............48
SECTION 10.5. Deposited Money And Government Securities To Be Held
In Trust; Other Miscellaneous Provisions.............49
SECTION 10.6. Repayment To Issuer......................................50
SECTION 10.7. Reinstatement............................................50
SECTION 10.8. Survival.................................................50
SECTION 10.9. Satisfaction and Discharge of Indenture..................50
ARTICLE Eleven MISCELLANEOUS PROVISIONS......................................51
SECTION 11.1. Partners, Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from
Individual Liability.................................51
SECTION 11.2. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities....................51
SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture......51
SECTION 11.4. Notices and Demands on Issuer, Trustee and Holders
of Securities........................................51
SECTION 11.5. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein...................52
SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays..........53
SECTION 11.7. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939................................53
SECTION 11.8. GOVERNING LAW............................................53
SECTION 11.9. Counterparts.............................................53
SECTION 11.10. Effect of Headings......................................53
ARTICLE Twelve REDEMPTION OF SECURITIES AND SINKING FUNDS....................53
SECTION 12.1. Applicability of Article.................................53
SECTION 12.2. Notice of Redemption; Partial Redemptions................54
SECTION 12.3. Payment of Securities Called for Redemption..............55
SECTION 12.4. Exclusion of Certain Securities from Eligibility for
Selection for Redemption.............................55
SECTION 12.5. Mandatory and Optional Sinking Funds.....................56
ARTICLE Thirteen GUARANTEES..................................................58
SECTION 13.1. Applicability of Article.................................58
SECTION 13.2. Guarantee................................................58
SECTION 13.3. Obligations of the Guarantor Unconditional...............59
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Page
SECTION 13.4. Article 13 Not To Prevent Events of Default..............60
SECTION 13.5. Execution and Delivery of Guarantee......................60
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FORM OF SENIOR INDENTURE
FORM OF SENIOR INDENTURE, dated as of ____ ___, 2001 among K.
Hovnanian Enterprises, Inc., a New Jersey corporation (the "Issuer"),
Hovnanian Enterprises, Inc., a Delaware Corporation ("Hovnanian"), Subsidiary
Guarantors of Hovnanian and FIRST UNION NATIONAL BANK, as trustee (the
"Trustee").
RECITALS OF THE ISSUER:
WHEREAS, the Issuer has duly authorized the issuance from time to
time of its unsecured debentures, notes or other evidences of indebtedness to
be issued in one or more series (the "Securities") up to such principal amount
or amounts as may from time to time be authorized in accordance with the terms
of this Indenture; and
WHEREAS, the Issuer has duly authorized the execution and delivery
of this Indenture to provide, among other things, for the authentication,
delivery and administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been undertaken and
completed.
RECITALS OF GUARANTORS:
WHEREAS, each Guarantor desires to make the Guarantees provided for
herein; and
WHEREAS, all things necessary to make this Indenture a valid
agreement of each of the Guarantors, in accordance with its terms, have been
done and the Guarantor will do all things necessary to make the Guarantees,
when executed by each of the Guarantors and endorsed on the Securities
authenticated and delivered hereunder, the valid obligations of each Guarantor
as hereinafter provided.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1. Definitions. For all purposes of this Indenture and of
any indenture supplemental hereto the following terms shall have the
respective meanings specified in this Section 1.1 (except as otherwise
expressly provided herein or in any indenture supplemental hereto or unless
the context otherwise clearly requires). All other terms used in this
Indenture that are defined in the Trust Indenture Act of 1939, including terms
defined therein by reference to the Securities Act of 1933, as amended (the
"Securities Act"), shall have the meanings assigned to such terms in said
Trust Indenture Act of 1939 and in the Securities Act as in force at the date
of this Indenture (except as herein otherwise expressly provided herein or in
any indenture supplemental hereto or unless the context otherwise clearly
requires).
All accounting terms used herein and not expressly defined shall
have the meanings assigned to such terms in accordance with generally accepted
accounting principles, and the term "generally accepted accounting principles"
means such accounting principles as are generally accepted on the date of this
Indenture.
The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. The expressions "date of this
Indenture", "date hereof", "date as of which this Indenture is dated" and
"date of execution and delivery of this Indenture" and other expressions of
similar import refer to the effective date of the original execution and
delivery of this Indenture, viz. as of ____ __, 2001.
The terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" shall have the meaning set forth in Section
6.14.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 United
States Codess.ss.101 et seq., or any successor statute thereto.
"Board of Directors" means when used with reference to the Issuer or
Hovnanian, as the case may be, the board of directors or any duly authorized
committee of that board or any director or directors and/or officer or
officers to whom that board or committee shall have duly delegated its
authority.
"Board Resolution" means (1) one or more resolutions, certified by
the secretary or an assistant secretary of the Issuer or Hovnanian, as
applicable, to have been duly adopted or consented to by the Board of
Directors of the Issuer or Hovnanian, as applicable, and to be in full force
and effect, or (2) a certificate signed by the director or directors and/or
officer or officers to whom the Board of Directors or any duly authorized
committee of that Board shall have duly delegated its authority, in each case
delivered to the Trustee for the Securities of any series.
"Business Day" means, with respect to any Security, unless otherwise
specified in a Board Resolution and an Officers' Certificate with respect to a
particular series of Securities, a day that (a) in the Place of Payment (or in
any of the Places of Payment, if more than one) in which amounts are payable,
as specified in the form of such Security, and (b) in the city in which the
Corporate Trust Office is located, is not a day on which banking institutions
are authorized or required by law or regulation to close.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
as amended, or, if at any time
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after the execution and delivery of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act of 1939, then the body performing such duties on such date.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets included on the most recent consolidated balance sheet of the Issuer
and its Restricted Subsidiaries, less applicable reserves and other properly
deductible items and after deducting therefrom (a) all current liabilities and
(b) all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles, all in accordance with generally
accepted accounting principles consistently applied.
"Corporate Trust Office" means the office of the Trustee of a series
of Securities at which the trust created by this Indenture shall, at any
particular time, be principally administered, which office is, at the date as
of which this Indenture is dated, located at 21 South Street, Morristown, New
Jersey 07960.
"Covenant Defeasance" has the meaning set forth in Section 10.3.
"Depositary" means, with respect to the Securities of any series
issuable or issued in the form of one or more Global Securities, the Person
designated as Depositary by the Issuer pursuant to Section 2.3 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or
include each Person who is then a Depositary hereunder, and, if at any time
there is more than one such Person, "Depositary" as used with respect to the
Securities of any such series shall mean the Depositary with respect to the
Global Securities of such series.
"Dollars" and the sign "$" means the coin and currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
"Eligible Guarantors" means Hovnanian and each of the other entities
listed on Exhibit B hereto.
"Event of Default" means any event or condition specified as such in
Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Global Security" means a Security evidencing all or a part of a
series of Securities issued to the Depositary for such series in accordance
with Section 2.3 and bearing the legend prescribed in Section 2.4.
"Guarantee" has the meaning specified in Section 13.2.
"Guarantor" has the meaning specified in Section 2.3.
"Holder", "Holder of Securities", "Securityholder" or other similar
terms mean, in the case of any Security, the Person in whose name such
Security is registered in the security register kept by the Issuer for that
purpose in accordance with the terms hereof.
"Hovnanian" means Hovnanian Enterprises, Inc., a Delaware
corporation.
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"Indebtedness" with respect to any Person means, without
duplication:
(a) (i) the principal of and premium, if any, and interest, if
any, on indebtedness for money borrowed of such Person, indebtedness
of such Person evidenced by bonds, notes, debentures or similar
obligations, and any guaranty by such Person of any indebtedness for
money borrowed or indebtedness evidenced by bonds, notes, debentures
or similar obligations of any other Person, whether any such
indebtedness or guaranty is outstanding on the date of this
Indenture or is thereafter created, assumed or incurred, (ii)
obligations of such Person for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit
transaction; (iii) the principal of and premium, if any, and
interest, if any, on indebtedness incurred, assumed or guaranteed by
such Person in connection with the acquisition by it or any of its
subsidiaries of any other businesses, properties or other assets;
(iv) lease obligations which such Person capitalizes in accordance
with Statement of Financial Accounting Standards No. 13 promulgated
by the Financial Accounting Standards Board or such other generally
accepted accounting principles as may be from time to time in
effect; (v) any indebtedness of such Person representing the balance
deferred and unpaid of the purchase price of any property or
interest therein (except any such balance that constitutes an
accrued expense or trade payable) and any guaranty, endorsement or
other contingent obligation of such Person in respect of any
indebtedness of another that is outstanding on the date of this
Indenture or is thereafter created, assumed or incurred by such
Person; and (vi) obligations of such Person under interest rate,
commodity or currency swaps, caps, collars, options and similar
arrangements; and
(b) any amendments, modifications, refundings, renewals or
extensions of any indebtedness or obligation described as
Indebtedness in clause (a) above.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, including, for all purposes of this instrument and any
such supplement, the provisions of the Trust Indenture Act of 1939 that are
deemed to be a part of and govern this instrument and any such supplement,
respectively, and shall include the forms and terms of particular series of
Securities established as contemplated hereunder.
"interest" means, when used with respect to non-interest bearing
Securities (including, without limitation, any Original Issue Discount
Security that by its terms bears interest only after maturity or upon default
in any other payment due on such Security), interest payable after maturity
(whether at stated maturity, upon acceleration or redemption or otherwise) or
after the date, if any, on which the Issuer becomes obligated to acquire a
Security, whether upon conversion, by purchase or otherwise.
"Issuer" means K. Hovnanian Enterprises, Inc., a New Jersey
corporation, and, subject to Article Nine, its successors and assigns.
"Issuer Order" means a written statement, request or order of the
Issuer, which is signed in its name by the chairman of the Board of Directors,
the president or any vice president of the Issuer, and delivered to the
Trustee.
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"Legal Defeasance" has the meaning specified in Section 10.2.
"Officers' Certificate", when used with respect to the Issuer or
Hovnanian, means a certificate signed by the chairman of the Board of
Directors, the president, or any vice president and by the treasurer, any
assistant treasurer, the controller, any assistant controller, the secretary
or any assistant secretary of the Issuer or Hovnanian, as the case may be.
Each such certificate shall include the statements provided for in Section
11.5 if and to the extent required by the provisions of such Section 11.5. One
of the officers signing an Officers' Certificate given pursuant to Section 4.3
shall be the principal executive, financial or accounting officer of the
Issuer or Hovnanian, as the case may be.
"Opinion of Counsel" means an opinion in writing signed by the chief
counsel of the Issuer or by such other legal counsel who may be an employee of
or counsel to the Issuer or Hovnanian and who shall be reasonably satisfactory
to the Trustee. Each such opinion shall include the statements provided for in
Section 11.5, if and to the extent required by the provisions of such Section
11.5.
"original issue date" of any Security (or portion thereof) means the
earlier of (a) the date of such Security or (b) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly)
on registration of transfer, exchange or substitution.
"original issue discount" of any debt security, including any
Original Issue Discount Security, means the difference between the principal
amount of such debt security and the initial issue price of such debt security
(as set forth in the case of an Original Issue Discount Security on the face
of such Security).
"Original Issue Discount Security" means any Security that provides
for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the maturity thereof pursuant to Article
Five.
"Outstanding" when used with reference to Securities, shall, subject
to the provisions of Section 7.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities (other than Securities of any series as to which
the provisions of Article Ten hereof shall not be applicable), or
portions thereof, for the payment or redemption of which moneys or
U.S. Government Obligations (as provided for in Section 10.1) in the
necessary amount shall have been deposited in trust with the Trustee
or with any paying agent (other than the Issuer) or shall have been
set aside, segregated and held in trust by the Issuer for the
Holders of such Securities (if the Issuer shall act as its own
paying agent), provided that, if such Securities, or portions
thereof, are to be redeemed prior to the maturity thereof, notice of
such redemption shall have been given as herein provided, or
provision satisfactory to the Trustee shall have been made for
giving such notice; and
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(c) Securities which shall have been paid or in substitution
for which other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.9 (except with respect
to any such Security as to which proof satisfactory to the Trustee
is presented that such Security is held by a Person in whose hands
such Security is a legal, valid and binding obligation of the
Issuer).
In determining whether the Holders of the requisite aggregate
principal amount of Outstanding Securities of any or all series have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding for such purposes shall be the portion of
the principal amount thereof that would be due and payable as of the date of
such determination (as certified by the Issuer to the Trustee) upon a
declaration of acceleration of the maturity thereof pursuant to Article Five.
"Periodic Offering" means an offering of Securities of a series from
time to time, the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the stated
maturity or maturities thereof and the redemption provisions, if any, with
respect thereto, are to be determined by the Issuer or its agents upon the
issuance of such Securities.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and interest, if any,
on the Securities of such series are payable as determined in accordance with
Section 2.3.
"principal" of a debt security, including any Security, means the
amount (including, without limitation, if and to the extent applicable, any
premium and, in the case of an Original Issue Discount Security, any accrued
original issue discount, but excluding interest) that is payable with respect
to such debt security as of any date and for any purpose (including, without
limitation, in connection with any sinking fund, if any, upon any redemption
at the option of the Issuer, upon any purchase or exchange at the option of
the Issuer or the holder of such debt security and upon any acceleration of
the maturity of such debt security).
"principal amount" of a debt security, including any Security, means
the principal amount as set forth on the face of such debt security.
"record date" shall have the meaning set forth in Section 2.7.
"Responsible Officer", when used with respect to the Trustee of a
series of Securities, means any officer of the Trustee with direct
responsibility for the administration of the trust created by this Indenture.
"Restricted Subsidiary" means (a) any Subsidiary of the Issuer other
than an Unrestricted Subsidiary, and (b) any Subsidiary of the Issuer which
was an Unrestricted Subsidiary but which, subsequent to the date hereof, is
designated by the Issuer (by Board Resolution) to be a
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Restricted Subsidiary; provided, however, that the Issuer may not designate
any such Subsidiary to be a Restricted Subsidiary if the Issuer would thereby
breach any covenant or agreement herein contained (on the assumptions that any
outstanding Indebtedness of such Subsidiary was incurred at the time of such
designation).
"Securities Act" shall have the meaning set forth in Section 1.1.
"Security" or "Securities" has the meaning stated in the first
recital of this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture; provided, however that if at
any time there is more than one Person acting as Trustee under this
Instrument, "Securities" with respect to the Indenture as to which such Person
is Trustee shall have the meaning stated in the first recital of this
instrument and shall more particularly mean Securities authenticated and
delivered under this instrument, exclusive, however, of Securities of any
series as to which such Person is not Trustee.
"Significant Subsidiary" means any Subsidiary which is a
"significant subsidiary" of the Issuer within the meaning of Rule 1.02(w) of
Regulation S-K promulgated by the Commission as in effect on the date of this
Indenture.
"Subsidiary" of any specified Person means any corporation of which
such Person, or such Person and one or more Subsidiaries of such Person, or
any one or more Subsidiaries of such Person, directly or indirectly own voting
securities entitling any one or more of such Persons and its Subsidiaries to
elect a majority of the directors, either at all times or, so long as there is
no default or contingency which permits the holders of any other class or
classes of securities to vote for the election of one or more directors.
"Trust Indenture Act of 1939" (except as otherwise provided in
Sections 8.1 and 8.2) means the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990, as in force at the date as of which this
Indenture is originally executed.
"Trustee" means the Person identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Six, shall also
include any successor trustee. "Trustee" shall also mean or include each
Person who is then a trustee hereunder and, if at any time there is more than
one such Person, "Trustee" as used with respect to the Securities of any
series shall mean the trustee with respect to the Securities of such series.
"Unrestricted Subsidiary" means (a) any Subsidiary of the Issuer
acquired or organized after the date hereof, provided, however, that such
Subsidiary shall not be a successor, directly or indirectly, to any Restricted
Subsidiary, and (b) any Subsidiary of the Issuer substantially all the assets
of which consist of stock or other securities of a Subsidiary or Subsidiaries
of the character described in clause (a) of this paragraph, unless and until
such Subsidiary shall have been designated to be a Restricted Subsidiary
pursuant to clause (b) of the definition of "Restricted Subsidiary".
"U.S. Government Obligations" means non-callable, non-payable bonds,
notes, bills or other similar obligations issued or guaranteed by the United
States government or any agency thereof the full and timely payment of which
are backed by the full faith and credit of the United States.
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"vice president," when used with respect to the Issuer or the
Trustee, means any vice president, regardless of whether designated by a
number or a word or words added before or after the title "vice president."
"Yield to Maturity" means the yield to maturity on a series of
Securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with generally accepted financial practice or as
otherwise provided in the terms of such series of Securities.
ARTICLE TWO
SECURITIES
SECTION 2.1. Forms Generally. The Securities of each series shall be
substantially in such form (not inconsistent with this Indenture) as shall be
established by or pursuant to one or more Board Resolutions (as set forth in a
Board Resolution or, to the extent established pursuant to rather than set
forth in a Board Resolution, an Officers' Certificate detailing such
establishment) or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have
imprinted or otherwise reproduced thereon such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may
be required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities as evidenced by their
execution of such Securities.
SECTION 2.2. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be
substantially as follows:
This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
______________________, as Trustee
By_____________________________
Authorized Signatory
If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Securities of such series shall
bear, in addition to the Trustee's certificate of authentication, an alternate
Certificate of Authentication which shall be substantially as follows:
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This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
__________________________, as Trustee
By________________________
as Authenticating Agent
By________________________
Authorized Signatory
SECTION 2.3. Amount Unlimited, Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series and the
Securities of each such series shall rank equally and pari passu with the
Securities of each other series and with all other unsecured and
unsubordinated debt of the Issuer. There shall be established in or pursuant
to one or more Board Resolutions (and, to the extent established pursuant to
rather than set forth in a Board Resolution, in an Officers' Certificate
detailing such establishment) or established in one or more indentures
supplemental hereto, prior to the initial issuance of Securities of any
series:
(1) the designation of the Securities of the series, which
shall distinguish the Securities of such series from the Securities
of all other series;
(2) any limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or
in lieu of, other Securities of the series pursuant to Section 2.8,
2.9, 2.11, 8.5 or 12.3);
(3) the date or dates on which the principal of the Securities
of the series is payable;
(4) the rate or rates at which the Securities of the series
shall bear interest, if any, the date or dates from which any such
interest shall accrue, on which any such interest shall be payable
and on which a record shall be taken for the determination of
Holders to whom any such interest is payable or the method by which
such rate or rates or date or dates shall be determined or both;
(5) the place or places where and the manner in which the
principal of, premium, if any, and interest, if any, on Securities
of the series shall be payable (if other than as provided in Section
3.2) and the office or agency for the Securities of the series
maintained by the Issuer pursuant to Section 3.2;
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(6) the right, if any, of the Issuer to redeem, purchase or
repay Securities of the series, in whole or in part, at its option
and the period or periods within which, the price or prices (or the
method by which such price or prices shall be determined or both) at
which, the form or method of payment therefor if other than in cash
and any terms and conditions upon which and the manner in which (if
different from the provisions of Article Twelve) Securities of the
series may be so redeemed, purchased or repaid, in whole or in part,
pursuant to any sinking fund or otherwise;
(7) the obligation, if any, of the Issuer to redeem, purchase
or repay Securities of the series in whole or in part pursuant to
any mandatory redemption, sinking fund or analogous provisions or at
the option of a Holder thereof and the period or periods within
which the price or prices (or the method by which such price or
prices shall be determined or both) at which, the form or method of
payment therefor if other than in cash and any terms and conditions
upon which and the manner in which (if different from the provisions
of Article Twelve) Securities of the series shall be redeemed,
purchased or repaid, in whole or in part, pursuant to such
obligation;
(8) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Securities of the
series shall be issuable;
(9) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be
payable upon acceleration of the maturity thereof;
(10) whether Securities of the series will be issuable as
Global Securities;
(11) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions,
the form and terms of such certificates, documents or conditions;
(12) any trustees, depositaries, authenticating or paying
agents, transfer agents or registrars or any other agents with
respect to the Securities of such series;
(13) any deleted, modified or additional events of default or
remedies or any deleted, modified or additional covenants with
respect to the Securities of such series;
(14) whether the provisions of Article Ten will not be
applicable to Securities of such series;
(15) any provision relating to the issuance of Securities of
such series at an original issue discount (including, without
limitation, the issue price thereof, the rate or rates at which such
original issue discount shall accrete, if any, and the date or dates
from or to which or period or periods during which such original
issue discount shall accrete at such rate or rates);
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(16) if other than Dollars, the foreign currency in which
payment of the principal of, premium, if any, and interest, if any,
on the Securities of such series shall be payable;
(17) if other than First Union National Bank is to act as
Trustee for the Securities of such series, the name and Corporate
Trust Office of such Trustee;
(18) if the amounts of payments of principal of, premium, if
any, and interest, if any, on the Securities of such series are to
be determined with reference to an index, the manner in which such
amounts shall be determined;
(19) the terms for conversion or exchange, if any, with respect
to the Securities of such series;
(20) which, if any, of the Eligible Guarantors, in addition to
Hovnanian, shall guarantee the Securities on the terms set forth in
Article Thirteen (Hovnanian, together with each of the other
Eligible Guarantors that guarantee the Securities set forth in
Article Thirteen, if any, a "Guarantor"); and
(21) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical,
except as to denomination and except as may otherwise be provided by or
pursuant to the Board Resolution or Officers' Certificate referred to above or
as set forth in any such indenture supplemental hereto. All Securities of any
one series need not be issued at the same time and may be issued from time to
time, consistent with the terms of this Indenture, if so provided by or
pursuant to such Board Resolution, such Officers' Certificate or in any such
indenture supplemental hereto.
Any such Board Resolution or Officers' Certificate referred to above
with respect to Securities of any series filed with the Trustee on or before
the initial issuance of the Securities of such series shall be incorporated
herein by reference with respect to Securities of such series and shall
thereafter be deemed to be a part of the Indenture for all purposes relating
to Securities of such series as fully as if such Board Resolution or Officers'
Certificate were set forth herein in full.
SECTION 2.4. Authentication and Delivery of Securities. The Issuer
may deliver Securities of any series executed by the Issuer to the Trustee for
authentication together with the applicable documents referred to below in
this Section 2.4, and the Trustee shall thereupon authenticate and deliver
such Securities to, or upon the order of, the Issuer (contained in the Issuer
Order referred to below in this Section 2.4) or pursuant to such procedures
acceptable to the Trustee and to such recipients as may be specified from time
to time by an Issuer Order. The maturity date, original issue date, interest
rate, if any, and any other terms of the Securities of such series shall be
determined by or pursuant to such Issuer Order and procedures. If provided for
in such procedures and agreed to by the Trustee, such Issuer Order may
authorize authentication and delivery pursuant to oral instructions from the
Issuer or its duly authorized agent, which instructions shall be promptly
confirmed in writing. In authenticating the Securities of such series and
accepting the additional responsibilities under this Indenture in relation to
such
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Securities, the Trustee shall be entitled to receive (in the case of
subparagraphs (2), (3) and (4) below only at or before the time of the first
request of the Issuer to the Trustee to authenticate Securities of such
series) and (subject to Section 6.1) shall be fully protected in relying upon,
unless and until such documents have been superseded or revoked:
(1) an Issuer Order requesting such authentication and setting
forth delivery instructions provided that, with respect to
Securities of a series subject to a Periodic Offering, (a) such
Issuer Order may be delivered by the Issuer to the Trustee prior to
the delivery to the Trustee of such Securities for authentication
and delivery, (b) the Trustee shall authenticate and deliver
Securities of such series for original issue from time to time, in
an aggregate principal amount not exceeding the aggregate principal
amount established for such series, pursuant to an Issuer Order or
pursuant to procedures acceptable to the Trustee as may be specified
from time to time by an Issuer Order, (c) the maturity date or
dates, original issue date or dates, interest rate or rates, if any,
and any other terms of Securities of such series shall be determined
by an Issuer Order or pursuant to such procedures, (d) if provided
for in such procedures, such Issuer Order may authorize
authentication and delivery pursuant to oral or electronic
instructions from the Issuer or its duly authorized agent or agents,
which oral instructions shall be promptly confirmed in writing and
(e) after the original issuance of the first Security of such series
to be issued, any separate request by the Issuer that the Trustee
authenticate Securities of such series for original issuance will be
deemed to be a certification by the Issuer that it is in compliance
with all conditions precedent provided for in this Indenture
relating to the authentication and delivery of such Securities;
(2) the Board Resolution, Officers' Certificate or executed
supplemental indenture referred to in Sections 2.1 and 2.3 by or
pursuant to which the forms and terms of the Securities of such
series were established;
(3) an Officers' Certificate setting forth the form or forms
and terms of the Securities stating that the form or forms and terms
of the Securities have been established pursuant to Sections 2.1 and
2.3 and comply with this Indenture and covering such other matters
as the Trustee may reasonably request; and
(4) at the option of the Issuer, either an Opinion of Counsel,
or a letter from legal counsel addressed to the Trustee permitting
it to rely on an Opinion of Counsel, substantially to the effect
that:
(a) the form or forms of the Securities of such series
have been duly authorized and established in conformity with
the provisions of this Indenture;
(b) in the case of an underwritten offering, the terms of
the Securities of such series have been duly authorized and
established in conformity with the provisions of this
Indenture, and, in the case of an offering that is not
underwritten, certain terms of the Securities of such series
have been established pursuant to a Board Resolution, an
Officers' Certificate or a supplemental indenture in accordance
with this Indenture, and when such other terms as are to be
established pursuant to procedures set forth in an Issuer Order
shall have been
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established, all such terms will have been duly authorized by
the Issuer and will have been established in conformity with
the provisions of this Indenture;
(c) when the Securities of such series have been executed
by the Issuer and authenticated by the Trustee in accordance
with the provisions of this Indenture and delivered to and duly
paid for by the purchasers thereof, they will have been duly
issued under this Indenture and will be valid and legally
binding obligations of the Issuer, enforceable in accordance
with their respective terms, and will be entitled to the
benefits of this Indenture; and
(d) the execution and delivery by the Issuer of, and the
performance by the Issuer of its obligations under, the
Securities of such series will not contravene any provision of
applicable law or the articles of incorporation or bylaws of
the Issuer or any agreement or other instrument binding upon
the Issuer or any of its Subsidiaries that is material to the
Issuer and its Subsidiaries, considered as one enterprise, or,
to such counsel's knowledge after the inquiry indicated
therein, any judgment, order or decree of any governmental
agency or any court having jurisdiction over the Issuer or any
Subsidiary of the Issuer, and no consent, approval or
authorization of any governmental body or agency is required
for the performance by the Issuer of its obligations under the
Securities, except such as are specified and have been obtained
and such as may be required by the securities or blue sky laws
of the various states in connection with the offer and sale of
the Securities.
In addition, if the authentication and delivery relates to a new
series of Securities created by an indenture supplemental hereto, such Opinion
of Counsel shall also state that all laws and requirements with respect to the
form and execution by the Issuer of the supplemental indenture with respect to
the series of Securities have been complied with, the Issuer has corporate
power to execute and deliver any such supplemental indenture and has taken all
necessary corporate action for those purposes and any such supplemental
indenture has been executed and delivered and constitutes the legal, valid and
binding obligation of the Issuer enforceable in accordance with its terms.
In rendering such opinions, such counsel may qualify any opinions as
to enforceability by stating that such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium and other
similar laws affecting the rights and remedies of creditors and is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the State of New
Jersey and the federal law of the United States, upon opinions of other
counsel (copies of which shall be delivered to the Trustee), who shall be
counsel reasonably satisfactory to the Trustee, in which case the opinion
shall state that such counsel believes that both such counsel and the Trustee
are entitled so to rely. Such counsel may also state that, insofar as such
opinion involves factual matters, such counsel has relied, to the extent such
counsel deems proper, upon certificates of officers of the Issuer and its
Subsidiaries and certificates of public officials.
The Trustee shall have the right to decline to authenticate and
deliver any Securities of any series under this Section 2.4 if the Trustee,
being advised by counsel, determines that such
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action may not lawfully be taken by the Issuer or if the Trustee in good faith
by its board of directors or board of trustees, executive committee or a trust
committee of directors or trustees or Responsible Officers shall determine
that such action would expose the Trustee to personal liability to existing
Holders or would adversely affect the Trustee's own rights, duties or
immunities under the Securities, this Indenture or otherwise.
If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Global
Securities, then the Issuer shall execute and the Trustee shall, in accordance
with this Section 2.4 and the Issuer Order with respect to such series,
authenticate and deliver one or more Global Securities that (i) shall
represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series to be issued in the
form of Global Securities and not yet cancelled, (ii) shall be registered in
the name of the Depositary for such Global Security or Securities or the
nominee of such Depositary, (iii) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions, and (iv) shall bear
a legend substantially to the following effect: "Unless and until it is
exchanged in whole or in part for Securities in definitive registered form,
this Security may not be transferred except as a whole by the Depositary to
the 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."
Each Depositary designated pursuant to Section 2.3 must, at the time
of its designation and at all times while it serves as Depositary, be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and any other applicable statute or regulation.
Reference is made to Section 13.4 concerning execution and delivery
of the Guarantees.
SECTION 2.5. Execution of Securities. The Securities shall be signed
on behalf of the Issuer by the chairman of the Board of Directors, the
president, any vice president or the treasurer of the Issuer, under its
corporate seal which may, but need not, be attested by its secretary or one of
its assistant secretaries. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. The seal of the Issuer
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of a seal or any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall
be authenticated and delivered by the Trustee or disposed of by the Issuer,
such Security nevertheless may be authenticated and delivered or disposed of
as though the person who signed such Security had not ceased to be such
officer of the Issuer; and any Security may be signed on behalf of the Issuer
by such persons as, at the actual date of the execution of such Security,
shall be the proper officers of the Issuer, although at the date of the
execution and delivery of this Indenture any such person was not such an
officer.
Reference is made to Section 13.4 concerning execution and delivery
of the Guarantees.
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SECTION 2.6. Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by the manual signature of one
of its authorized signatories, or its Authenticating Agent, shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
The execution of such certificate by the Trustee or its Authenticating Agent
upon any Security executed by the Issuer shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture. Each
reference in this Indenture to authentication by the Trustee includes
authentication by an agent appointed pursuant to Section 6.14.
Reference is made to Section 13.4 concerning execution and delivery
of the Guarantees.
SECTION 2.7. Denomination and Date of Securities; Payments of
Interest. The Securities of each series shall be issuable in registered form
in denominations established as contemplated by Section 2.3 or, with respect
to the Securities of any series, if not so established, in denominations of
$1,000 and any integral multiple thereof. The Securities of each series shall
be numbered, lettered or otherwise distinguished in such manner or in
accordance with such plan as the officers of the Issuer executing the same may
determine with the approval of the Trustee, as evidenced by the execution and
authentication thereof.
Each Security shall be dated the date of its authentication. The
Securities of each series shall bear interest, if any, from the date, and such
interest, if any, shall be payable on the dates, established as contemplated
by Section 2.3.
The Person in whose name any Security of any series is registered at
the close of business on any record date applicable to a particular series
with respect to any interest payment date for such series shall be entitled to
receive the interest, if any, payable on such interest payment date
notwithstanding any transfer or exchange of such Security subsequent to the
record date and prior to such interest payment date, except if and to the
extent the Issuer shall default in the payment of the interest due on such
interest payment date for such series, in which case such defaulted interest
shall be paid to the Persons in whose names Outstanding Securities for such
series are registered (a) at the close of business on a subsequent record date
(which shall be not less than five Business Days prior to the date of payment
of such defaulted interest) established by notice given by mail by or on
behalf of the Issuer to the Holders of Securities not less than 15 days
preceding such subsequent record date or (b) as determined by such other
procedure as is mutually acceptable to the Issuer and the Trustee. The term
"record date" as used with respect to any interest payment date (except a date
for payment of defaulted interest) for the Securities of any series shall mean
the date specified as such in the terms of the Securities of such series
established as contemplated by Section 2.3, or, if no such date is so
established, if such interest payment date is the first day of a calendar
month, the fifteenth day of the next preceding calendar month or, if such
interest payment date is the fifteenth day of a calendar month, the first day
of such calendar month, whether or not such record date is a Business Day.
SECTION 2.8. Registration, Transfer and Exchange. The Issuer will
keep at each office or agency to be maintained for the purpose as provided in
Section 3.2 for each series of Securities a register or registers in which,
subject to such reasonable regulations as it may prescribe, it will provide
for the registration of Securities of each series and the registration of
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transfer of Securities of such series. Each such register shall be in written
form in the English language or in any other form capable of being converted
into such form within a reasonable time. At all reasonable times such register
or registers shall be open for inspection and available for copying by the
Trustee.
Upon due presentation for registration of transfer of any Security
of any series at any such office or agency to be maintained for the purpose as
provided in Section 3.2, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities of the same series, maturity date, interest rate, if
any, and original issue date in authorized denominations for a like aggregate
principal amount.
All Securities presented for registration of transfer shall (if so
required by the Issuer or the Trustee) be duly endorsed by, or be accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Issuer and the Trustee duly executed by, the Holder or his attorney duly
authorized in writing.
At the option of the Holder thereof, Securities of any series (other
than a Global Security, except as set forth below) may be exchanged for a
Security or Securities of such series having authorized denominations and an
equal aggregate principal amount, upon surrender of such Securities to be
exchanged at the agency of the Issuer that shall be maintained for such
purpose in accordance with Section 3.2.
The Issuer may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
registration of transfer of Securities. No service charge shall be made for
any such transaction or for any exchange of Securities of any series as
contemplated by the immediately preceding paragraph.
The Issuer shall not be required to exchange or register a transfer
of (a) any Securities of any series for a period of 15 days next preceding the
first mailing or publication of notice of redemption of Securities of such
series to be redeemed, (b) any Securities selected, called or being called for
redemption, in whole or in part, except, in the case of any Security to be
redeemed in part, the portion thereof not so to be redeemed or (c) any
Security if the Holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Security in whole or in part, except the portion of
such Security not required to be repurchased.
Notwithstanding any other provision of this Section 2.8, unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, a Global Security representing all or a part of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series
or a nominee of such successor Depositary.
If at any time the Depositary for any Securities of a series
represented by one or more Global Securities notifies the Issuer that it is
unwilling or unable to continue as Depositary for such Securities or if at any
time the Depositary for such Securities shall no longer be eligible under
Section 2.4, the Issuer shall appoint a successor Depositary with respect to
such Securities. If a successor Depositary for such Securities is not
appointed by the Issuer within 90 days after the Issuer receives such notice
or becomes aware of such ineligibility, the Issuer's election
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pursuant to Section 2.3 that such Securities be represented by one or more
Global Securities shall no longer be effective and the Issuer shall execute,
and the Trustee, upon receipt of an Issuer Order for the authentication and
delivery of definitive Securities of such series, will authenticate and
deliver Securities of such series in definitive registered form, in any
authorized denominations, in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such
Securities in exchange for such Global Security or Securities.
The Issuer may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global
Securities shall no longer be represented by a Global Security or Securities.
In such event, the Issuer shall execute, and the Trustee, upon receipt of an
Issuer Order for the authentication and delivery of definitive Securities of
such series, shall authenticate and deliver, Securities of such series in
definitive registered form, in any authorized denominations, in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities representing such Securities, in exchange for such Global Security
or Securities.
If specified by the Issuer pursuant to Section 2.3 with respect to
Securities represented by a Global Security, the Depositary for such Global
Security may surrender such Global Security in exchange in whole or in part
for Securities of the same series in definitive registered form on such terms
as are acceptable to the Issuer and such Depositary. Thereupon, the Issuer
shall execute, and the Trustee shall authenticate and deliver, without service
charge,
(i) to the Person specified by such Depositary, a new Security
or Securities of the same series, of any authorized denominations as
requested by such Person, in an aggregate principal amount equal to
and in exchange for such Person's beneficial interest in the Global
Security; and
(ii) to such Depositary a new Global Security in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of
Securities authenticated and delivered pursuant to clause (i) above.
Upon the exchange of a Global Security for Securities in definitive
registered form in authorized denominations, such Global Security shall be
cancelled by the Trustee or an agent of the Trustee. Securities in definitive
registered form issued in exchange for a Global Security pursuant to this
Section 2.8 shall be registered in such names and in such authorized
denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Trustee or the Issuer or an agent of
the Issuer. The Trustee or such agent shall deliver at its office such
Securities to or as directed by the Persons in whose names such Securities are
so registered.
All Securities issued upon any registration of transfer or exchange
of Securities shall be valid and legally binding obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
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SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall become
mutilated or defaced or be destroyed, lost or stolen, the Issuer in its
discretion may execute, and upon the written request of the Issuer, the
Trustee shall authenticate and deliver a new Security of the same series,
maturity date, interest rate, if any, and original issue date, bearing a
number or other distinguishing symbol not contemporaneously outstanding, in
exchange and substitution for the mutilated or defaced Security, or in lieu of
and in substitution for the Security so destroyed, lost or stolen. In every
case the applicant for a substitute Security shall furnish to the Issuer and
to the Trustee and any agent of the Issuer or the Trustee such security or
indemnity as may be required by the Trustee or the Issuer or any such agent to
indemnify and defend and to save each of the Trustee and the Issuer and any
such agent harmless and, in every case of destruction, loss or theft, evidence
to their satisfaction of the destruction, loss or theft of such Security and
of the ownership thereof and in the case of mutilation or defacement, shall
surrender the Security to the Trustee or such agent.
Upon the issuance of any substitute Security, the Issuer may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee or its agent) connected therewith. In case
any Security which has matured or is about to mature or has been called for
redemption in full shall become mutilated or defaced or be destroyed, lost or
stolen, the Issuer may instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the
case of a mutilated or defaced Security), if the applicant for such payment
shall furnish to the Issuer and to the Trustee and any agent of the Issuer or
the Trustee such security or indemnity as any of them may require to hold each
of them harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Issuer and the Trustee and any agent of
the Issuer or the Trustee evidence to the Trustee's satisfaction of the
destruction, loss or theft of such Security and of the ownership thereof.
Every substitute Security of any series issued pursuant to the
provisions of this Section by virtue of the fact that any such Security is
destroyed, lost or stolen shall constitute an additional contractual
obligation of the Issuer, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone and shall be entitled to
all the benefits of (but shall be subject to all the limitations of rights set
forth in) this Indenture equally and proportionately with any and all other
Securities of such series duly authenticated and delivered hereunder. All
Securities shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, defaced, destroyed, lost or stolen
Securities and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments
or other securities without their surrender.
SECTION 2.10. Cancellation of Securities; Disposition Thereof. All
Securities surrendered for payment, redemption, registration of transfer or
exchange, or for credit against any payment in respect of a sinking or
analogous fund, if surrendered to the Issuer or any agent of the Issuer or the
Trustee or any agent of the Trustee, shall be delivered to the Trustee or its
agent for cancellation or, if surrendered to the Trustee, shall be cancelled
by it; and no Securities shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this
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Indenture. The Trustee shall dispose of all cancelled Securities in accordance
with its standard procedures and shall deliver a certificate of such
disposition to the Company. If the Issuer or its agent shall acquire any of
the Securities, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Securities unless and
until the same are delivered to the Trustee or its agent for cancellation.
SECTION 2.11. Temporary Securities. Pending the preparation of
definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be
issuable in any authorized denomination, and substantially in the form of the
definitive Securities of such series but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Issuer with the concurrence of the Trustee as evidenced by
the execution and authentication thereof. Temporary Securities may contain
such references to any provisions of this Indenture as may be appropriate.
Every temporary Security shall be executed by the Issuer and be authenticated
by the Trustee upon the same conditions and in substantially the same manner,
and with like effect, as the definitive Securities. Without unreasonable delay
the Issuer shall execute and shall furnish definitive Securities of such
series and thereupon temporary Securities of such series may be surrendered in
exchange therefor without charge at each office or agency to be maintained by
the Issuer for that purpose pursuant to Section 3.2 and the Trustee shall
authenticate and deliver in exchange for such temporary Securities of such
series an equal aggregate principal amount of definitive Securities of the
same series having authorized denominations. Until so exchanged, the temporary
Securities of any series shall be entitled to the same benefits under this
Indenture as definitive Securities of such series, unless otherwise
established pursuant to Section 2.3.
SECTION 2.12. CUSIP Numbers. The Issuer in issuing the Securities
may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Securities
or as contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Securities, and any
such redemption shall not be affected by any defect in or omission of such
numbers.
ARTICLE THREE
COVENANTS
SECTION 3.1. Payment of Principal and Interest. The Issuer covenants
and agrees that it will duly and punctually pay or cause to be paid the
principal of, premium, if any, and interest, if any, on each of the Securities
at the place, at the respective times and in the manner provided in the
Securities.
SECTION 3.2. Offices for Notices and Payments, etc. So long as any
of the Securities are Outstanding, the Issuer and Hovnanian will maintain in
each Place of Payment, an office or agency where the Securities may be
presented for payment, an office or agency where the Securities may be
presented for registration of transfer and for exchange as provided in this
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Indenture, and an office or agency where notices and demands to or upon the
Issuer and Hovnanian in respect of the Securities or of this Indenture may be
served. In case the Issuer shall at any time fail to maintain any such office
or agency, or shall fail to give notice to the Trustee of any change in the
location thereof, presentation may be made and notice and demand may be served
in respect of the Securities or of this Indenture at the Corporate Trust
Office. The Issuer hereby initially designates the Corporate Trust Office for
each such purpose and appoints the Trustee as registrar and paying agent and
as the agent upon whom notices and demands may be served with respect to the
Securities.
SECTION 3.3. No Interest Extension. In order to prevent any
accumulation of claims for interest after maturity thereof, the Issuer will
not directly or indirectly extend or consent to the extension of the time for
the payment of any claim for interest on any of the Securities and will not
directly or indirectly be a party to or approve any such arrangement by the
purchase or funding of said claims or in any other manner; provided, however,
that this Section 3.3 shall not apply in any case where an extension shall be
made pursuant to a plan proposed by the Issuer to the Holders of all
Securities of any series then Outstanding.
SECTION 3.4. Appointments to Fill Vacancies in Trustee's Office. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of the
Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 3.5. Provision as to Paying Agent. (a) If the Issuer shall
appoint a paying agent other than the Trustee, it will cause such paying agent
to execute and deliver to the Trustee an instrument in which such paying agent
shall agree with the Trustee, subject to the provisions of this Section 3.5,
(1) that it will hold all sums held by it as such paying agent
for the payment of the principal of or interest, if any, on the
Securities (whether such sums have been paid to it by the Issuer or
by any other obligor on the Securities) in trust for the benefit of
the Holders of the Securities and the Trustee; and
(2) that it will give the Trustee notice of any failure by the
Issuer (or by any other obligor on the Securities) to make any
payment of the principal of, premium, if any, or interest, if any,
on the Securities when the same shall be due and payable; and
(3) that it will, at any time during the continuance of any
such failure, upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such paying agent.
(b) If the Issuer shall act as its own paying agent, it will, on or
before each due date of the principal of or interest, if any, on the
Securities, set aside, segregate and hold in trust for the benefit of the
Holders of the Securities a sum sufficient to pay such principal, premium, if
any, or interest, if any, so becoming due and will notify the Trustee of any
failure to take such action and of any failure by the Issuer (or by any other
obligor under the Securities) to make any payment of the principal of,
premium, if any, or interest, if any, on the Securities when the same shall
become due and payable.
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(c) Anything in this Section 3.5 to the contrary notwithstanding,
the Issuer may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid
to the Trustee all sums held in trust by it, or any paying agent hereunder, as
required by this Section 3.5, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 3.5 to the contrary notwithstanding,
any agreement of the Trustee or any paying agent to hold sums in trust as
provided in this Section 3.5 is subject to Sections 10.3 and 10.4.
(e) Whenever the Issuer shall have one or more paying agents, it
will, on or before each due date of the principal of or interest, if any, on
any Securities, deposit with a paying agent a sum sufficient to pay the
principal, premium, if any, or interest, if any, so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such principal,
premium, if any, or interest, if any, and (unless such paying agent is the
Trustee) the Issuer will promptly notify the Trustee of its action or failure
so to act.
SECTION 3.6. Limitation on Liens. So long as any of the Securities
are Outstanding, the Issuer will not, and will not permit any Restricted
Subsidiary to, pledge, mortgage, hypothecate or grant a security interest in,
or permit any mortgage, pledge, security interest or other lien upon, any
property or assets owned by the Issuer or any Restricted Subsidiary to secure
any Indebtedness, without making effective provision whereby the Securities
then Outstanding shall (so long as such other Indebtedness shall be so
secured) be equally and ratably secured with any and all such other
Indebtedness and any other indebtedness similarly entitled to be equally and
ratably secured; provided, however, that this restriction shall not apply to
nor prevent the creation or existence of:
(a) any mortgage, pledge, security interest, lien or
encumbrance upon any property or assets created at the time of the
acquisition of such property or assets by the Issuer or any
Restricted Subsidiary or within one year after such time to secure
all or a portion of the purchase price for such property or assets;
(b) any mortgage, pledge, security interest, lien or
encumbrance upon any property or assets existing thereon at the time
of the acquisition thereof by the Issuer or any Restricted
Subsidiary (whether or not the obligations secured thereby are
assumed by the Issuer or any Subsidiary of the Issuer);
(c) any mortgage, pledge, security interest, lien or
encumbrance upon any property or assets, whenever acquired, of any
corporation or other entity that becomes a Restricted Subsidiary
after the date hereof, provided that (i) the instrument creating
such mortgage, pledge, security interest, lien or encumbrance shall
be in effect prior to the time such corporation or other entity
becomes a Restricted Subsidiary and (ii) such mortgage, pledge,
security interest, lien or encumbrance shall only apply to
properties or assets owned by such corporation or other entity at
the time it becomes a Restricted Subsidiary or thereafter acquired
by it from sources other than the Issuer or another Restricted
Subsidiary;
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(d) any mortgage, pledge, security interest, lien or
encumbrance in favor of the Issuer or any wholly-owned Subsidiary of
the Issuer;
(e) any mortgage, pledge, security interest, lien or
encumbrance created or assumed by the Issuer or a Restricted
Subsidiary in connection with the issuance of debt securities to
interest on which is excludable from gross income of the holder of
such security pursuant to the Internal Revenue Code of 1986, as
amended, for the purpose of financing, in whole or in part, the
acquisition or construction of property or assets to be used by the
Issuer or a Subsidiary;
(f) any extension, renewal or refunding of any mortgage,
pledge, security interest, lien or encumbrance permitted by the
foregoing subparagraphs (a) through (e) above on substantially the
same property or assets theretofore subject thereto;
(g) any mortgage, pledge, security interest, lien or
encumbrance securing any Indebtedness in an amount which, together
with all other Indebtedness secured by a mortgage, pledge, security
interest, lien or encumbrance that is not otherwise permitted by the
provisions of this Section 3.6, does not at the time of the
incurrence of the Indebtedness so secured exceed 20% of Consolidated
Net Tangible Assets;
(h) deposits or pledges to secure the payment of workmen's
compensation, unemployment insurance or other social security
benefits or obligations, or to secure the performance of trade
contracts, leases, public or statutory obligations, surety or appeal
bonds or other obligations of a like general nature incurred in the
ordinary course of business;
(i) mechanics', materialmen's, warehousemen's, carriers' or
other like liens arising in the ordinary course of business securing
obligations which are not overdue for a period longer than 30 days
or which are being contested in good faith by appropriate
proceedings;
(j) liens for taxes, assessments or other governmental charges
not yet payable or being contested in good faith and as to which
adequate reserves shall have been established in accordance with
generally accepted accounting principles;
(k) non-recourse mortgages on Income Producing Properties
securing Indebtedness;
(l) liens on assets of a Mortgage Subsidiary to secure only a
Warehouse Line of Credit provided to such Subsidiary;
(m) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business; or
(n) liens in connection with capital leases or sale leaseback
transactions not securing any other indebtedness.
In case the Issuer or any Restricted Subsidiary shall propose to
pledge, mortgage, hypothecate or grant a security interest in any property or
assets owned by the Issuer or any
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Restricted Subsidiary to secure any Indebtedness, other than as permitted by
subdivisions (a) to (n), inclusive, of this Section 3.6, the Issuer will prior
thereto give written notice thereof to the Trustee, and the Issuer will, or
will cause such Restricted Subsidiary to, prior to or simultaneously with such
pledge, mortgage, hypothecation or grant of security interest, by supplemental
indenture executed to the Trustee (or to the extent legally necessary to
another trustee or additional or separate trustee), in form satisfactory to
the Trustee, effectively secure (for so long as such other Indebtedness shall
be so secured) all the Securities equally and ratably with such Indebtedness
and with any other indebtedness similarly entitled to be equally and ratably
secured. Such supplemental indenture shall contain the provisions concerning
the possession, control, release and substitution of mortgaged and pledged
property and securities and other appropriate matters which are required by
the Trust Indenture Act of 1939 (as in effect at the date of execution of such
supplemental indenture) to be included in a secured indenture qualified under
the Trust Indenture Act of 1939, and may also contain such additional and
amendatory provisions permitted by the Trust Indenture Act of 1939 as the
Issuer and the Trustee shall deem advisable or appropriate or as the Trustee
shall deem necessary in connection with such pledge, mortgage, hypothecation
or grant of security interest.
For purpose of this Section 3.6, "security interest" shall include
the interest of the lessor under a lease with a term of three years or more
that should be, in accordance with generally accepted accounting principles,
recorded as a capital lease, and any such lease of property or assets not
acquired from the Issuer or any Restricted Subsidiary in contemplation of such
lease shall be treated as though the lessee had purchased such property or
assets from the lessor.
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER, Hovnanian AND THE TRUSTEE
SECTION 4.1. Issuer and Hovnanian to Furnish Trustee Information as
to Names and Addresses of Securityholders. The Issuer and Hovnanian and any
other obligor on the Securities covenant and agree that they will furnish or
cause to be furnished to the Trustee a list in such form as the Trustee may
reasonably require of the names and addresses of the Holders of the Securities
of each series:
(a) semiannually and not more than 15 days after each January 1
and July 1, and
(b) at such other times as the Trustee may request in writing,
within 15 days after receipt by the Issuer of any such request,
provided that if and so long as the Trustee shall be the registrar for such
series, such list shall not be required to be furnished.
SECTION 4.2. Preservation and Disclosure of Securityholders Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders of
each series of Securities (i) contained in the most recent list furnished to
it as provided in Section 4.1, and (ii) received by it in the capacity of
registrar or paying agent for such series, if so acting. The Trustee may
destroy any list furnished to it as provided in Section 4.1 upon receipt of a
new list so furnished.
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(b) In case three or more Holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to
the Trustee reasonable proof that each such applicant has owned a Security for
a period of at least six months preceding the date of such application, and
such application states that the applicants desire to communicate with other
Holders of Securities of a particular series (in which case the applicants
must all hold Securities of such series) or with Holders of all Securities
with respect to their rights under this Indenture or under such Securities and
such application is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt of such application, at its
election, either
(i) afford to such applicants access to the information
preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2, or
(ii) inform such applicants as to the approximate number of
Holders of Securities of such series or of all Securities, as the
case may be, whose names and addresses appear in the information
preserved at the time by the Trustee, in accordance with the
provisions of subsection (a) of this Section 4.2, and as to the
approximate cost of mailing to such Securityholders the form of
proxy or other communication, if any, specified in such application.
If the Trustee shall elect not to afford to such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of such series or all Holders of
Securities, as the case may be, whose name and address appears in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2 a copy of the form of proxy
or other communication which is specified in such request, with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the Holders
of Securities of such series or of all Securities, as the case may be, or
would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter
an order refusing to sustain any of such objections or if, after the entry of
an order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met, and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Securityholders with reasonable promptness
after the entry of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such applicants
respecting their application.
(c) Each and every Holder of Securities, by receiving and holding
the same, agrees with the Issuer, Hovnanian and the Trustee that neither the
Issuer nor Hovnanian nor the Trustee nor any agent of the Issuer or Hovnanian
or the Trustee shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders of Securities in
accordance with the provisions of subsection (b) of this Section 4.2,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under such subsection (b).
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SECTION 4.3. Reports by the Issuer and Hovnanian. The Issuer and
Hovnanian covenant:
(a) to file with the Trustee, within 15 days after the Issuer or
Hovnanian is required, as the case may be, to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which the
Issuer or Hovnanian, as the case may be, may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if
the Issuer or Hovnanian, as the case may be, is not required to file
information, documents or reports pursuant to either of such Sections, then to
file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act, in respect of a debt
security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;
(b) to file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Issuer or Hovnanian, as the case may be, with the conditions and covenants
provided for in this Indenture as may be required from time to time by such
rules and regulations;
(c) to transmit by mail to the Holders of Securities within 30 days
after the filing thereof with the Trustee, in the manner and to the extent
provided in Section 4.4(c), such summaries of any information, documents and
reports required to be filed by the Issuer or Hovnanian, as the case may be,
pursuant to subsections (a) and (b) of this Section 4.3 as may be required to
be transmitted to such Holders by rules and regulations prescribed from time
to time by the Commission; and
(d) to furnish to the Trustee, not less than annually, a brief
certificate from the principal executive officer, principal financial officer
or principal accounting officer as to his knowledge of the Issuer's or
Hovnanian's, as the case may be, compliance with all conditions and covenants
under this Indenture. For purposes of this subsection (d), such compliance
shall be determined without regard to any period of grace or requirement of
notice provided under this Indenture.
SECTION 4.4. Reports by the Trustee. (a) The Trustee shall transmit
to Holders such reports concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust Indenture Act of 1939 at
the times and in the manner provided pursuant thereto. To the extent that any
such report is required by the Trust Indenture Act of 1939 with respect to any
12 month period, such report shall cover the 12 month period ending July 15
and shall be transmitted by the next succeeding September 15.
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be furnished to the Issuer and Hovnanian and
be filed by the Trustee with each stock exchange upon which the Securities of
any applicable series are listed and also with the Commission. The Issuer and
Hovnanian agree to promptly notify the Trustee with respect to any series when
and as the Securities of such series become admitted to trading on any
national securities exchange.
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ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITY HOLDERS
ON EVENT OF DEFAULT
SECTION 5.1. Events of Default. "Event of Default", wherever used
herein with respect to Securities of any series, means any one or more of the
following events (whatever the reason for such Event of Default), unless it is
either inapplicable to a particular series or it is specifically deleted or
modified in or pursuant to the Board Resolution or supplemental indenture
establishing such series of Securities or in the form of Security, for such
series:
(a) default in the payment of the principal of or premium, if
any, of the Securities of such series as and when the same shall
become due and payable either at maturity, upon redemption, by
declaration or otherwise; or
(b) default in the payment of any installment of interest on
any of the Securities of such series as and when the same shall
become due and payable, and continuance of such default for a period
of 30 days; or
(c) default in the payment or satisfaction of any sinking fund
or other purchase obligation with respect to Securities of such
series, as and when such obligation shall become due and payable; or
(d) failure on the part of the Issuer or a Guarantor duly to
observe or perform any other of the covenants or agreements on the
part of the Issuer in, or a Guarantor of, the Securities of such
series or in this Indenture continued for a period of 90 days after
the date on which written notice of such failure, requiring the
Issuer or a Guarantor to remedy the same, shall have been given by
certified or registered mail to the Issuer or a Guarantor by the
Trustee, or to the Issuer or a Guarantor and the Trustee by the
Holders of at least 25% in aggregate principal amount of the
Securities of such series then Outstanding; or
(e) without the consent of the Issuer or Hovnanian, a court
having jurisdiction shall enter an order for relief with respect to
the Issuer or Hovnanian or any of its Significant Subsidiaries under
any applicable bankruptcy, insolvency or other similar law of the
United States of America, any state thereof or the District of
Columbia, or without the consent of the Issuer or Hovnanian, a court
having jurisdiction shall enter a judgment, order or decree
adjudging the Issuer or Hovnanian or any of its Significant
Subsidiaries bankrupt or insolvent, or enter an order for relief for
reorganization, arrangement, adjustment or composition of or in
respect of the Issuer or Hovnanian or any of its Significant
Subsidiaries under any applicable bankruptcy, insolvency or other
similar law of the United States of America, any state thereof or
the District of Columbia, and the continuance of any such judgment,
order or decree is unstayed and in effect for a period of 60
consecutive days; or
(f) the Issuer or Hovnanian or any of its Significant
Subsidiaries shall institute proceedings for entry of an order for
relief with respect to the Issuer or Hovnanian or any of its
Significant Subsidiaries under any applicable bankruptcy, insolvency
or other similar law of the United States of America, any state
thereof or the District of Columbia,
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or for an adjudication of insolvency, or shall consent to the
institution of bankruptcy or insolvency proceedings against it, or
shall file a petition seeking, or seek or consent to reorganization,
arrangement, composition or relief under any applicable bankruptcy,
insolvency or other similar law of the United States of America, any
state thereof or the District of Columbia, or shall consent to the
filing of such petition or to the appointment of a receiver,
custodian, liquidator, assignee, trustee, sequestrator or similar
official of the Issuer or Hovnanian or of substantially all of its
property, or the Issuer or Hovnanian or any of its Significant
Subsidiaries shall make a general assignment for the benefit of
creditors as recognized under any applicable bankruptcy, insolvency
or other similar law of the United States of America, any state
thereof or the District of Columbia; or
(g) a Guarantee ceases to be in full force and effect (other
than in accordance with the terms of any Guarantee) or a Guarantor
denies or disaffirms its obligations under the Guarantee; or
(h) any other Event of Default provided with respect to the
Securities of such series.
If an Event of Default with respect to Securities of any series then
Outstanding occurs and is continuing, then and in each and every such case,
unless the principal of all of the Securities of such series shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Securities of such series then
Outstanding, by notice in writing to the Issuer (and to the Trustee if given
by Securityholders), may declare the principal (or, if the Securities of such
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of such series) of all the Securities
of such series and the interest, if any, accrued thereon to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, notwithstanding anything to the contrary
contained in this Indenture or in the Securities of such series. This
provision, however, is subject to the condition that, if at any time after the
unpaid principal amount (or such specified amount) of the Securities of such
series shall have been so declared due and payable and before any judgment or
decree for the payment of the moneys due shall have been obtained or entered
as hereinafter provided, the Issuer shall pay or shall deposit with the
Trustee a sum sufficient to pay all matured installments of interest, if any,
upon all of the Securities of such series and the principal of any and all
Securities of such series which shall have become due otherwise than by
acceleration (with interest on overdue installments of interest, if any, to
the extent that payment of such interest is enforceable under applicable law
and on such principal at the rate borne by the Securities of such series to
the date of such payment or deposit) and the reasonable compensation,
disbursements, expenses and advances of the Trustee and all other amounts due
the Trustee under Section 6.6, and any and all defaults under this Indenture,
other than the nonpayment of such portion of the principal amount of and
accrued interest, if any, on Securities of such series which shall have become
due by acceleration, shall have been cured or shall have been waived in
accordance with Section 5.7 or provision deemed by the Trustee to be adequate
shall have been made therefor, then and in every such case the Holders of a
majority in aggregate principal amount of the Securities of such series then
Outstanding, by written notice to the Issuer and to the Trustee, may rescind
and annul such declaration and its consequences; but no such rescission and
annulment shall extend to or shall affect any subsequent default, or shall
impair any right consequent thereon. Notwithstanding the
-27-
previous sentence, no waiver shall be effective against any Holder for any
Event of Default or event which with notice or lapse of time or both would be
an Event of Default with respect to any covenant or provision which cannot be
modified or amended without the consent of the Holder of each outstanding
Security affected thereby, unless all such affected Holders agree, in writing,
to waive such Event of Default or other event.
If any Event of Default specified in Section 5.1(e) or 5.1(f) occurs
with respect to the Issuer, all unpaid principal amount (or, if the Securities
of any series then Outstanding are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of each such
series) and accrued interest on all Securities of each series then Outstanding
shall ipso facto become and be immediately due and payable without any
declaration or other act by the Trustee or any Securityholder.
If the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Issuer, the Trustee and the Securityholders shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Issuer, the Trustee and the Securityholders shall continue as
though no such proceeding had been taken.
Except with respect to an Event of Default pursuant to Section 5.1
(a), (b) or (c), the Trustee shall not be charged with knowledge of any Event
of Default unless written notice thereof shall have been given to a
Responsible Officer by the Issuer, a paying agent or any Securityholder.
SECTION 5.2. Payment of Securities on Default; Suit Therefor. The
Issuer covenants that (a) if default shall be made in the payment of any
installment of interest upon any of the Securities of any series then
Outstanding as and when the same shall become due and payable, and such
default shall have continued for a period of 30 days, or (b) if default shall
be made in the payment of the principal of any of the Securities of such
series as and when the same shall have become due and payable, whether at
maturity of the Securities of such series or upon redemption or by declaration
or otherwise, then, upon demand of the Trustee, the Issuer will pay to the
Trustee, for the benefit of the Holders of the Securities, the whole amount
that then shall have become due and payable on all such Securities of such
series for principal or interest, if any, or both, as the case may be, with
interest upon the overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) upon the overdue installments of
interest, if any, at the rate borne by the Securities of such series; and, in
addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including a reasonable compensation to the
Trustee, its agents, attorneys and counsel, and any expenses or liabilities
incurred by the Trustee hereunder other than through its negligence or bad
faith.
If the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any
such judgment or final decree against the Issuer or any other obligor on the
Securities of such series and collect in the manner provided by law out of the
property of the Issuer or any other
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obligor on the Securities of such series, wherever situated, the moneys
adjudged or decreed to be payable.
If there shall be pending proceedings for the bankruptcy or for the
reorganization of the Issuer or any other obligor on the Securities of any
series then Outstanding under any bankruptcy, insolvency or other similar law
now or hereafter in effect, or if a receiver or trustee or similar official
shall have been appointed for the property of the Issuer or such other
obligor, or in the case of any other similar judicial proceedings relative to
the Issuer or other obligor upon the Securities of such series, or to the
creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of the Securities of such series shall
then be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand pursuant to
the provisions of this Section 5.2, shall be entitled and empowered by
intervention in such proceedings or otherwise to file and prove a claim or
claims for the whole amount of principal and interest, if any, owing and
unpaid in respect of the Securities of such series, and, in case of any
judicial proceedings, to 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 and of the Securityholders allowed in such judicial proceedings
relative to the Issuer or any other obligor on the Securities of such series,
its or their creditors, or its or their property, and to collect and receive
any moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses, and any
receiver, assignee or trustee or similar official in bankruptcy or
reorganization is hereby authorized by each of the Securityholders to make
such payments to the Trustee, and, if the Trustee shall consent to the making
of such payments directly to the Securityholders, to pay to the Trustee any
amount due it for compensation and expenses or otherwise pursuant to Section
6.6, including counsel fees and expenses incurred by it up to the date of such
distribution. To the extent that such payment of reasonable compensation,
expenses and counsel fees and expenses out of the estate in any such
proceedings shall be denied for any reason, payment of the same shall be
secured by a lien on, and shall be paid out of, any and all distributions,
dividends, moneys, securities and other property which the Holders of the
Securities of such series may be entitled to receive in such proceedings,
whether in liquidation or under any plan of reorganization or arrangement or
otherwise.
All rights of action and of asserting claims under this Indenture,
or under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall be for the ratable benefit of the
Holders of the Securities of the series in respect of which such judgment has
been recovered.
SECTION 5.3. Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee pursuant to Section 5.2 with respect to Securities of
any series then Outstanding shall be applied in the order following, at the
date or dates fixed by the Trustee for the distribution of such moneys, upon
presentation of the several Securities of such series, and stamping thereon
the payment, if only partially paid, and upon surrender thereof, if fully
paid:
FIRST: To the payment of costs and expenses of collection and
reasonable compensation to the Trustee, its agents, attorneys and
counsel, and of all other expenses
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and liabilities incurred, and all advances made, by the Trustee
pursuant to Section 6.6 except as a result of its negligence or bad
faith;
SECOND: If the principal of the Outstanding Securities of such
series shall not have become due and be unpaid, to the payment of
interest, if any, on the Securities of such series, in the order of
the maturity of the installments of such interest, if any, with
interest (to the extent that such interest has been collected by the
Trustee) upon the overdue installments of interest, if any, at the
rate borne by the Securities of such series, such payment to be made
ratably to the Persons entitled thereto;
THIRD: If the principal of the Outstanding Securities of such
series shall have become due, by declaration or otherwise, to the
payment of the whole amount then owing and unpaid upon the
Securities of such series for principal and interest, if any, with
interest on the overdue principal and (to the extent that such
interest has been collected by the Trustee) upon overdue
installments of interest, if any, at the rate borne by the
Securities of such series; and in case such moneys shall be
insufficient to pay in full the whole amounts so due and unpaid upon
the Securities of such series, then to the payment of such principal
and interest, if any, without preference or priority of principal
over interest or of interest over principal, or of any installment
of interest over any other installment of interest, or of any
Security over any other Security, ratably to the aggregate of such
principal and accrued and unpaid interest; and
FOURTH: To the payment of any surplus then remaining to the
Issuer, its successors or assigns, or to whomsoever may be lawfully
entitled to receive the same.
No claim for interest which in any manner at or after maturity shall
have been transferred or pledged separate or apart from the Securities to
which it relates, or which in any manner shall have been kept alive after
maturity by an extension (otherwise than pursuant to an extension made
pursuant to a plan proposed by the Issuer to the Holders of all Securities of
any series then Outstanding), purchase, funding or otherwise by or on behalf
or with the consent or approval of the Issuer shall be entitled, in case of a
default hereunder, to any benefit of this Indenture, except after prior
payment in full of the principal of all Securities of any series then
Outstanding and of all claims for interest not so transferred, pledged, kept
alive, extended, purchased or funded.
SECTION 5.4. Proceedings by Securityholders. No Holder of any
Securities of any series then Outstanding shall have any right by virtue of or
by availing of any provision of this Indenture to institute any suit, action
or proceeding in equity or at law upon or under or with respect to this
Indenture or for the appointment of a receiver or trustee or similar official,
or for any other remedy hereunder, unless such Holder previously shall have
given to the Trustee written notice of default and of the continuance thereof,
as hereinbefore provided, and unless the Holders of not less than 25% in
aggregate principal amount of the Securities of such series then Outstanding
shall have made written request to the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee
for 60 days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding, it being understood and intended, and being expressly covenanted
by the Holder of every Security of such series with every other Holder and the
Trustee, that no one or more Holders of Securities
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of such series shall have any right in any manner whatever by virtue of or by
availing of any provision of this Indenture or of the Securities to affect,
disturb or prejudice the rights of any other Holder of such Securities of such
series, or to obtain or seek to obtain priority over or preference as to any
other such Holder, or to enforce any right under this Indenture or the
Securities, except in the manner herein provided and for the equal, ratable
and common benefit of all Holders of Securities of such series.
Notwithstanding any other provisions in this Indenture, however, the
right of any Holder of any Security to receive payment of the principal of,
premium, if any, and interest, if any, on such Security, on or after the
respective due dates expressed in such Security, or to institute suit for the
enforcement of any such payment on or after such respective dates shall not be
impaired or affected without the consent of such Holder.
SECTION 5.5. Proceedings by Trustee. In case of an Event of Default
hereunder, the Trustee may in its discretion proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any of such rights, either by suit in equity or by action at law or by
proceedings in bankruptcy or otherwise, whether for the specific enforcement
of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other legal
or equitable right vested in the Trustee by this Indenture or by law.
SECTION 5.6. Remedies Cumulative and Continuing. All powers and
remedies given by this Article Five to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive
of any thereof or of any other powers and remedies available to the Trustee or
the Securityholders, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture, and no delay or omission of the Trustee or of any Securityholder to
exercise any right or power accruing upon any default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be
a waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 5.4, every power and remedy given by this Article Five
or by law to the Trustee or to the Securityholders may be exercised from time
to time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
SECTION 5.7. Direction of Proceedings; Waiver of Defaults by
Majority of Securityholders. The Holders of a majority in aggregate principal
amount of the Securities of any series then Outstanding shall have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to Securities of such series; provided, however, that
(subject to the provisions of Section 6.1) the Trustee shall have the right to
decline to follow any such direction if the Trustee shall determine upon
advice of counsel that the action or proceeding so directed may not lawfully
be taken or if the Trustee in good faith by its board of directors, its
executive committee, or a trust committee of directors or Responsible Officers
or both shall determine that the action or proceeding so directed would
involve the Trustee in personal liability. The Holders of a majority in
aggregate principal amount of the Securities of any series then Outstanding
may on behalf of the Holders of all of the Securities of such series waive any
past default or Event of Default hereunder and its consequences except a
default in the payment of interest, if any, on, or the principal of, the
Securities of such series. Upon any such waiver the
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Issuer, the Trustee and the Holders of the Securities of such series shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon. Whenever any default or Event
of Default hereunder shall have been waived as permitted by this Section 5.7,
said default or Event of Default shall for all purposes of the Securities and
this Indenture be deemed to have been cured and to be not continuing.
SECTION 5.8. Notice of Defaults. The Trustee shall, within 90 days
after the occurrence of a default, with respect to Securities of any series
then Outstanding, mail to all Holders of Securities of such series, as the
names and the addresses of such Holders appear upon the Securities register,
notice of all defaults known to the Trustee with respect to such series,
unless such defaults shall have been cured before the giving of such notice
(the term "defaults" for the purpose of this Section 5.8 being hereby defined
to be the events specified in clauses (a), (b), (c), (d), (e), (f), (g) and
(h) of Section 5.1, not including periods of grace, if any, provided for
therein and irrespective of the giving of the written notice specified in said
clause (d) but in the case of any default of the character specified in said
clause (d) no such notice to Securityholders shall be given until at least 60
days after the giving of written notice thereof to the Issuer pursuant to said
clause (d)); provided, however, that, except in the case of default in the
payment of the principal of or interest, if any, on any of the Securities, or
in the payment or satisfaction of any sinking fund or other purchase
obligation, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee, or a trust
committee of directors or Responsible Officers or both of the Trustee in good
faith determines that the withholding of such notice is in the best interests
of the Securityholders.
SECTION 5.9. Undertaking to Pay Costs. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the
cost of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 5.9 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Securityholder, or group of Securityholders, holding in the
aggregate more than 10% in principal amount of the Securities of any series
then Outstanding, or to any suit instituted by any Securityholders for the
enforcement of the payment of the principal of or interest, if any, on any
Security against the Issuer on or after the due date expressed in such
Security.
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1. Duties and Responsibilities of the Trustee; During
Default; Prior to Default. In case an Event of Default with respect to the
Securities of a series has occurred (which has not been cured or waived) the
Trustee shall exercise with respect to such series of Securities 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 man would exercise or use under
the circumstances in the conduct of his own affairs.
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No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with respect
to the Securities of any series and after the curing or waiving of
all such Events of Default with respect to such series which may
have occurred:
(i) the duties and obligations of the Trustee with respect
to the Securities of any series shall be determined solely by
the express provisions of this Indenture, and the Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such statements,
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers
of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders pursuant to Section 5.7 relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that
the repayment of such funds or adequate indemnity against such liability is
not reasonably assured to it.
SECTION 6.2. Certain Rights of the Trustee. Subject to Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
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(b) any request, direction, order or demand of the Issuer mentioned
herein shall be sufficiently evidenced by an Officers' Certificate or Issuer
Order (unless other evidence in respect thereof be herein specifically
prescribed); and any resolution of the Board of Directors may be evidenced to
the Trustee by a Board Resolution;
(c) the Trustee may consult with counsel of its selection and any
advice of such counsel promptly confirmed in writing shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted to be taken by it hereunder in good faith and in reliance thereon
in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of this
Indenture (including, without limitation, pursuant to Section 5.7), unless
such Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred
therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing so to do by
the Holders of not less than a majority in aggregate principal amount of the
Securities of all series affected then Outstanding; provided that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such expenses or liabilities as a
condition to proceeding; the reasonable expenses of every such investigation
shall be paid by the Issuer or, if paid by the Trustee or any predecessor
Trustee, shall be repaid by the Issuer upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder;
(h) the Trustee shall not be charged with knowledge of any default
or Event of Default with respect to a series of Securities unless either (i) a
Responsible Officer of the Trustee assigned to the Corporate Trust Office of
the Trustee (or any successor division or department of the Trustee) shall
have actual knowledge of such default or Event of Default or (ii) written
notice of such default or Event of Default shall have been given to the
Trustee by the Issuer or any other obligor on such series of Securities or by
any Holder of Securities of such series; and
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(i) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture.
SECTION 6.3. Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture, of the
Securities or of any prospectus used to sell the Securities. The Trustee shall
not be accountable for the use or application by the Issuer of any of the
Securities or of the proceeds thereof.
SECTION 6.4. Trustee and Agents May Hold Securities; Collections,
etc. The Trustee or any agent of the Issuer or the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee or such agent and,
subject to Sections 6.8 and 6.13, may otherwise deal with the Issuer and
receive, collect, hold and retain collections from the Issuer with the same
rights it would have if it were not the Trustee or such agent.
SECTION 6.5. Moneys Held by Trustee. Subject to the provisions of
Section 10.4 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the
extent required by mandatory provisions of law. Neither the Trustee nor any
agent of the Issuer or the Trustee shall be under any liability for interest
on any moneys received by it hereunder.
SECTION 6.6. Compensation and Indemnification of Trustee and Its
Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such compensation as shall be
agreed to in writing between the Issuer and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust) and the Issuer covenants and agrees to pay or reimburse the
Trustee and each predecessor Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by or on behalf of it in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad
faith. The Issuer also covenants to indemnify the Trustee and each predecessor
Trustee for, and to hold it harmless against, any and all loss, liability,
damage, claim or expense, including taxes (other than taxes based on the
income of the Trustee), incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and its duties hereunder, including the
costs and expenses of defending itself against or investigating any claim or
liability in the premises. The obligations of the Issuer under this Section
6.6 to compensate and indemnify the Trustee and each predecessor Trustee and
to pay or reimburse the Trustee and each predecessor Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Trustee. Such additional indebtedness shall be a
senior claim to that of the Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit
of the Holders of particular Securities. When the Trustee
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incurs expenses or renders services in connection with an Event of Default
specified in Section 5.1 or in connection with Article Five hereof, the
expenses (including the reasonable fees and expenses of its counsel) and the
compensation for the service in connection therewith are intended to
constitute expenses of administration under any bankruptcy law. The provisions
of this Section 6.6 shall survive the resignation or removal of the Trustee
and the termination of this Indenture.
SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc.
Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts
of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered
or omitted by it under the provisions of this Indenture upon the faith
thereof.
SECTION 6.8. Qualification of Trustee; Conflicting Interests. This
Indenture shall always have a Trustee who satisfies the requirements of
Section 310(a)(1) of the Trust Indenture Act of 1939. The Trustee shall have a
combined capital and surplus of at least $25,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with
Section 310(b) of the Trust Indenture Act of 1939 regarding disqualification
of a trustee upon acquiring a conflicting interest.
SECTION 6.9. Persons Eligible for Appointment as Trustee; Different
Trustees for Different Series. The Trustee for each series of Securities
hereunder shall at all times be a corporation organized and doing business
under the laws of the United States of America or of any state or the District
of Columbia having a combined capital and surplus of at least $25,000,000, and
which is authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal, state or District of
Columbia authority, or a corporation or other Person permitted to act as
trustee by the Commission. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. No obligor upon the Securities or any Affiliate of
such obligor shall serve as trustee upon the Securities. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section 6.9, the Trustee shall resign immediately in the manner and with
the effect specified in Section 6.10.
A different Trustee may be appointed by the Issuer for each series
of Securities prior to the issuance of such Securities. If the initial Trustee
for any series of Securities is to be a trustee other than First Union
National Bank, the Issuer and such Trustee shall, prior to the issuance of
such Securities, execute and deliver an indenture supplemental hereto, which
shall provide for the appointment of such Trustee as Trustee for the
Securities of such series and shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same
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trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered
by any other such Trustee.
SECTION 6.10. Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign with respect to one or more or all series of Securities by
giving written notice of resignation to the Issuer. Upon receiving such notice
of resignation, the Issuer shall promptly appoint a successor trustee or
trustees with respect to the applicable series by written instrument in
duplicate, executed by authority of the Board of Directors, one copy of which
instrument shall be delivered to the resigning trustee and one copy to the
successor trustee or trustees. If no successor trustee shall have been so
appointed with respect to any series and have accepted appointment within 30
days after the mailing of such notice of resignation, the resigning trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee, or any Securityholder who has been a bona fide Holder of a
Security or Securities of the applicable series for at least six months may,
subject to the provisions of Section 5.9, on behalf of himself and all others
similarly situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 6.8 with respect to any series of Securities after written
request therefor by the Issuer or by any Securityholder who has been
a bona fide Holder of a Security or Securities of such series for at
least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.9 and shall fail to resign after written
request therefor by the Issuer or by any such Securityholder; or
(iii) the Trustee shall become incapable of acting with respect
to any series of Securities, or shall be adjudged a bankrupt or
insolvent, or a receiver or liquidator of the Trustee or of its
property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;
then, in any such case, the Issuer may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such
series by written instrument, in duplicate, executed by order of the Board of
Directors one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or, subject to the provisions
of Article Five, any Securityholder who has been a bona fide Holder of a
Security or Securities of such series for at least six months may on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
trustee with respect to such series. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the
Securities of each series then Outstanding may at any time remove the Trustee
with respect to Securities of such
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series and appoint a successor trustee with respect to the Securities of such
series by delivering to the Trustee so removed, to the successor trustee so
appointed and to the Issuer the evidence provided for in Section 7.1 of the
action in that regard taken by the Securityholders. If no successor trustee
shall have been so appointed with respect to any series and have accepted
appointment within 30 days after the delivery of such evidence of removal, the
Trustee may petition any court of competent jurisdiction for the appointment
of a successor trustee, or any Securityholder who has been a bona fide Holder
of a Security or Securities of the applicable series for at least six months
may, subject to the provisions of Section 5.9, on behalf of himself and all
others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, appoint a successor trustee.
(d) Any resignation or removal of the Trustee with respect to any
series and any appointment of a successor trustee with respect to such series
pursuant to any of the provisions of this Section 6.10 shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
6.11.
SECTION 6.11. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and
obligations with respect to such series of its predecessor hereunder, with
like effect as if originally named as trustee for such series hereunder; but,
nevertheless, on the written request of the Issuer or of the successor
trustee, upon payment of its charges then unpaid, the trustee ceasing to act
shall, subject to Section 10.4, pay over to the successor trustee all moneys
at the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Issuer shall
execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.6.
If a successor trustee is appointed with respect to the Securities
of one or more (but not all) series, the Issuer, the predecessor Trustee and
each successor trustee with respect to the Securities of any applicable series
shall execute and deliver an indenture supplemental hereto which shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the predecessor Trustee with respect
to the Securities of any series as to which the predecessor Trustee is not
retiring shall continue to be vested in the predecessor Trustee, and shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such trustees co-trustees of the same
trust and that each such trustee shall be trustee of a trust or trusts under
separate indentures.
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No successor trustee with respect to any series of Securities shall
accept appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor trustee shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9.
Upon acceptance of appointment by any successor trustee as provided
in this Section 6.11, the Issuer shall give notice thereof to the Holders of
Securities of each series affected, by mailing such notice to such Holders at
their addresses as they shall appear on the registry books. If the Issuer
fails to give such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
given at the expense of the Issuer.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee (including the trust created by this
Indenture), shall be the successor of the Trustee hereunder, provided that
such corporation shall be qualified under the provisions of Section 6.8 and
eligible under the provisions of Section 6.9, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any of the Securities of any series shall
have been authenticated but not delivered, any such successor to the Trustee
may adopt the certificate of authentication of any predecessor Trustee and
deliver such Securities so authenticated; and, in case at that time any of the
Securities of any series shall not have been authenticated, any successor to
the Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor Trustee; and in all such
cases such certificate shall have the full force which it is anywhere in the
Securities of such series or in this Indenture provided that the certificate
of the Trustee shall have; provided, that the right to adopt the certificate
of authentication of any predecessor Trustee or to authenticate Securities of
any series in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 6.13. Preferential Collection of Claims Against the Issuer.
The Trustee shall comply with Section 311(a) of the Trust Indenture Act of
1939, excluding any creditor relationship listed in Section 311(b) of the
Trust Indenture Act of 1939. A Trustee who has resigned or been removed shall
be subject to Section 311(a) of the Trust Indenture Act of 1939 to the extent
indicated therein.
SECTION 6.14. Appointment of Authenticating Agent. As long as any
Securities of a series remain Outstanding, the Trustee may, by an instrument
in writing, appoint with the approval of the Issuer an authenticating agent
(the "Authenticating Agent") which shall be authorized to act on behalf of the
Trustee to authenticate Securities, including Securities issued upon exchange,
registration of transfer, partial redemption or pursuant to Section 2.9.
Securities of each such series authenticated by such Authenticating Agent
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee. Whenever
reference is made in this Indenture to the authentication and delivery of
Securities of any series by the Trustee or to the Trustee's Certificate of
Authentication, such
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reference shall be deemed to include authentication and delivery on behalf of
the Trustee by an Authenticating Agent for such series and a Certificate of
Authentication executed on behalf of the Trustee by such Authenticating Agent.
Such Authenticating Agent shall at all times be a corporation organized and
doing business under the laws of the United States of America or of any state
or the District of Columbia, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $25,000,000
(determined as provided in Section 6.9 with respect to the Trustee) and
subject to supervision or examination by federal or state authority.
Any corporation into which any Authenticating Agent may be merged or
converted, or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency
business (including the authenticating agency contemplated by this Indenture)
of any Authenticating Agent, shall continue to be the Authenticating Agent
with respect to all series of Securities for which it served as Authenticating
Agent without the execution or filing of any paper or any further act on the
part of the Trustee or such Authenticating Agent. Any Authenticating Agent may
at any time, and if it shall cease to be eligible shall, resign by giving
written notice of resignation to the Trustee and to the Issuer. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to the Issuer.
Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 6.14 with respect
to one or more series of Securities, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Issuer and the Issuer
shall provide notice of such appointment to all Holders of Securities of such
series in the manner and to the extent provided in Section 11.4. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as Authenticating Agent.
The Issuer agrees to pay to the Authenticating Agent for such series from time
to time reasonable compensation. The Authenticating Agent for the Securities
of any series shall have no responsibility or liability for any action taken
by it as such at the direction of the Trustee.
Sections 6.2, 6.3, 6.4 and 7.3 shall be applicable to any
Authenticating Agent.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1. Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in principal amount of the Securityholders of any or all series may
be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such specified percentage of Securityholders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee. Proof of execution of any instrument
or of a writing appointing any such agent shall be sufficient for any purpose
of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of
the Trustee and the Issuer, if made in the manner provided in this Article
Seven.
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SECTION 7.2. Proof of Execution of Instruments and of Holding of
Securities. Subject to Sections 6.1 and 6.2, the execution of any instrument
by a Securityholder or his agent or proxy may be proved in the following
manner:
(a) The fact and date of the execution by any Holder of any
instrument may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments
of deeds or administer oaths that the person executing such
instruments acknowledged to him the execution thereof, or by an
affidavit of a witness to such execution sworn to before any such
notary or other such officer. Where such execution is by or on
behalf of any legal entity other than an individual, such
certificate or affidavit shall also constitute sufficient proof of
the authority of the person executing the same.
(b) The ownership of Securities shall be proved by the Security
register or by a certificate of the Security registrar.
SECTION 7.3. Holders to be Treated as Owners. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the
Person in whose name any Security shall be registered upon the Security
register for such series as the absolute owner of such Security (whether or
not such Security shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of and, subject to the provisions of this
Indenture, interest, if any, on such Security and for all other purposes; and
neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee
shall be affected by any notice to the contrary.
SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Outstanding Securities of any or all series have concurred in any direction,
consent or waiver under this Indenture, Securities which are owned by the
Issuer or any other obligor on the Securities with respect to which such
determination is being made or by any Affiliate of the Issuer or any other
obligor on the Securities with respect to which such determination is being
made shall be disregarded and deemed not to be Outstanding for the purpose of
any such determination, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver
only Securities which a Responsible Officer of the Trustee knows are so owned
shall be so disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Issuer or any other obligor upon
the Securities or any Affiliate of the Issuer or any other obligor on the
Securities. In case of a dispute as to such right, the advice of counsel shall
be full protection in respect of any decision made by the Trustee in
accordance with such advice. Upon request of the Trustee, the Issuer shall
furnish to the Trustee promptly an Officers' Certificate listing and
identifying all Securities, if any, known by the Issuer to be owned or held by
or for the account of any of the above-described Persons; and, subject to
Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Securities not listed therein are Outstanding for the purpose of
any such determination.
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SECTION 7.5. Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Trustee, as provided in Section 7.1,
of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action, any Holder of a
Security the serial number of which is shown by the evidence to be included
among the serial numbers of the Securities the Holders of which have consented
to such action may, by filing written notice at the Corporate Trust Office and
upon proof of holding as provided in this Article Seven, revoke such action so
far as concerns such Security provided that such revocation shall not become
effective until three Business Days after such filing. Except as aforesaid,
any such action taken by the Holder of any Security shall be conclusive and
binding upon such Holder and upon all future Holders and owners of such
Security and of any Securities issued in exchange or substitution therefor or
on registration of transfer thereof, irrespective of whether or not any
notation in regard thereto is made upon any such Security. Any action taken by
the Holders of the percentage in aggregate principal amount of the Securities
of any or all series, as the case may be, specified in this Indenture in
connection with such action shall be conclusively binding upon the Issuer, the
Trustee and the Holders of all the Securities affected by such action.
SECTION 7.6. Record Date for Consents and Waivers. The Issuer may,
but shall not be obligated to, establish a record date for the purpose of
determining the Persons entitled to (i) waive any past default with respect to
the Securities of such series in accordance with Section 5.7 of the Indenture,
(ii) consent to any supplemental indenture in accordance with Section 8.2 of
the Indenture or (iii) waive compliance with any term, condition or provision
of any covenant hereunder. If a record date is fixed, the Holders on such
record date, or their duly designated proxies, and any such Persons, shall be
entitled to waive any such past default, consent to any such supplemental
indenture or waive compliance with any such term, condition or provision,
whether or not such Holder remains a Holder after such record date; provided,
however, that unless such waiver or consent is obtained from the Holders, or
duly designated proxies, of the requisite principal amount of Outstanding
Securities of such series prior to the date which is the 120th day after such
record date, any such waiver or consent previously given shall automatically
and, without further action by any Holder be cancelled and of no further
effect.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a Board Resolution (which
resolution may provide general terms or parameters for such action and may
provide that the specific terms of such action may be determined in accordance
with or pursuant to an Issuer Order), and the Trustee may from time to time
and at any time enter into an indenture or indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act of 1939 as
in force at the date of the execution thereof) for one or more of the
following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the
Trustee as security for the Securities of one or more series any
property or assets;
(b) to evidence the succession of another Person to the Issuer
or Hovnanian or successive successions, and the assumption by the
successor Person of the covenants,
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agreements and obligations of the Issuer or Hovnanian herein and in
the Securities or the Guarantees;
(c) to add to the covenants of the Issuer or Hovnanian such
further covenants, restrictions, conditions or provisions for the
protection of the Holders of all or any series of Securities (and if
such covenants, restrictions, conditions or provisions are to be for
the protection of less than all series of Securities, stating that
the same are expressly being included solely for the protection of
such series), or to surrender any right or power herein conferred
upon the Issuer or Hovnanian, and to make the occurrence, or the
occurrence and continuance, of a default in any such additional
covenants, restrictions, conditions or provisions an Event of
Default permitting the enforcement of all or any of the several
remedies provided in this Indenture as herein set forth; provided,
however, that in respect of any such additional covenant,
restriction, condition or provision such supplemental indenture may
provide for a particular period of grace after default (which period
may be shorter or longer than that allowed in the case of other
defaults) or may provide for an immediate enforcement upon such an
Event of Default or may limit the remedies available to the Trustee
upon such an Event of Default or may limit the right of the Holders
of a majority in aggregate principal amount of the Securities of
such series to waive such an Event of Default;
(d) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which
may be defective or inconsistent with any other provision contained
herein or in any supplemental indenture, or to make any other
provisions as the Issuer may deem necessary or desirable, provided,
however, that no such action shall materially adversely affect the
interests of the Holders of the Securities;
(e) to establish the form or terms of Securities or the
Guarantees to be endorsed thereon of any series as permitted by
Sections 2.1 and 2.3;
(f) to provide for the issuance of Securities of any series in
coupon form (including Securities registrable as to principal only)
and to provide for exchangeability of such Securities for the
Securities issued hereunder in fully registered form and to make all
appropriate changes for such purpose;
(g) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the Trust Indenture Act of
1939, or under any similar federal statute hereafter enacted, and to
add to this Indenture such other provisions as may be expressly
permitted by the Trust Indenture Act of 1939, excluding, however,
the provisions referred to in Section 316(a)(2) of the Trust
Indenture Act of 1939 as in effect at the date as of which this
instrument was executed or any corresponding provision provided for
in any similar federal statute hereafter enacted;
(h) to evidence and provide for the acceptance of appointment
hereunder of a Trustee other than First Union National Bank as
Trustee for a series of Securities and to add to or change any of
the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 6.9
hereof;
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(i) subject to Section 8.2 hereof, to add to or modify the
provisions hereof as may be necessary or desirable to provide for
the denomination of Securities in foreign currencies which shall not
adversely affect the interests of the Holders of the Securities in
any material respect;
(j) to modify the covenants or Events of Default of the Issuer
solely in respect of, or add new covenants or Events of Default of
the Issuer that apply solely to, Securities not Outstanding on the
date of such supplemental indenture; and
(k) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of
one or more series and to add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one trustee,
pursuant to the requirements of Section 6.11.
The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the
Securities then Outstanding, notwithstanding any of the provisions of Section
8.2.
SECTION 8.2. Supplemental Indentures with Consent of
Securityholders. With the consent (evidenced as provided in Article Seven) of
the Holders of not less than a majority in aggregate principal amount of the
Securities then Outstanding of any series affected by such supplemental
indenture, the Issuer, when authorized by a Board Resolution (which resolution
may provide general terms or parameters for such action and may provide that
the specific terms of such action may be determined in accordance with or
pursuant to an Issuer Order), and the Trustee may, from time to time and at
any time, enter into an indenture or indentures supplemental hereto (which
shall conform to the provisions of the Trust Indenture Act of 1939 as in force
at the date of execution thereof) for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Indenture or of any supplemental indenture or of modifying in any manner the
rights of the Holders of the Securities of such series; provided, that no such
supplemental indenture shall (a) extend the stated final maturity of the
principal of any Security, or reduce the principal amount thereof, or reduce
the rate or extend the time of payment of interest, if any, thereon (or, in
the case of an Original Issue Discount Security, reduce the rate of accretion
of original issue discount thereon), or reduce or alter the method of
computation of any amount payable on redemption, repayment or purchase by the
Issuer thereof (or the time at which any such redemption, repayment or
purchase may be made), or make the principal thereof (including any amount in
respect of original issue discount), or interest, if any, thereon payable in
any coin or currency other than that provided in the Securities or in
accordance with the terms of the Securities, or reduce the amount of the
principal of an Original Issue Discount Security that would be due and payable
upon an acceleration of the maturity thereof pursuant to Section 5.1 or the
amount thereof provable in bankruptcy pursuant
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to Section 5.2, or impair or affect the right of any Securityholder to
institute suit for the payment thereof or, if the Securities provide therefor,
any right of repayment or purchase at the option of the Securityholder, in
each case without the consent of the Holder of each Security so affected, or
(b) reduce the aforesaid percentage of Securities of any series, the consent
of the Holders of which is required for any such supplemental indenture,
without the consent of the Holders of each Security so affected. No consent of
any Holder of any Security shall be necessary under this Section 8.2 to permit
the Trustee and the Issuer to execute supplemental indentures pursuant to
Sections 8.1 and 9.2.
A supplemental indenture which changes or eliminates any covenant,
Event of Default or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series of
Securities, or which modifies the rights of Holders of Securities of such
series, with respect to such covenant or provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any
other series.
Upon the request of the Issuer, accompanied by a copy of a
resolution of the Board of Directors (which resolution may provide general
terms or parameters for such action and may provide that the specific terms of
such action may be determined in accordance with or pursuant to an Issuer
Order) certified by the secretary or an assistant secretary of the Issuer
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of the Holders of the
Securities as aforesaid and other documents, if any, required by Section 7.1,
the Trustee shall join with the Issuer in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may at its discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the Securityholders
under this Section 8.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 8.2, the
Issuer (or the Trustee at the request and expense of the Issuer) shall give
notice thereof to the Holders of then Outstanding Securities of each series
affected thereby, as provided in Section 11.4. Any failure of the Issuer to
give such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
SECTION 8.3. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Trustee, the Issuer and the
Holders of Securities of each series affected thereby shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and shall be deemed to be part of the terms
and conditions of this Indenture for any and all purposes.
SECTION 8.4. Documents to Be Given to Trustee. The Trustee, subject
to the provisions of Sections 6.1 and 6.2, shall be entitled to receive an
Officers' Certificate and an
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Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article Eight complies with the applicable
provisions of this Indenture and that all conditions precedent to the
execution and delivery of such supplemental indenture have been satisfied.
SECTION 8.5. Notation on Securities in Respect of Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article Eight may bear a notation in form approved by the Trustee for such
series as to any matter provided for by such supplemental indenture or as to
any action taken by Securityholders. If the Issuer or the Trustee shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Issuer, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by
the Issuer, and such Securities may be authenticated by the Trustee and
delivered in exchange for the Securities of such series then Outstanding.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR OTHER
DISPOSITION
SECTION 9.1. Consolidate Permitted, etc., on Certain Terms. Subject
to the provisions of Section 9.2, nothing contained in this Indenture or in
any of the Securities shall prevent any consolidation or merger of the Issuer
or Hovnanian with or into any other Person or Persons (whether or not
affiliated with the Issuer), or successive consolidations or mergers in which
the Issuer or Hovnanian or their successor or successors shall be a party or
parties, or shall prevent any sale, lease, exchange or other disposition of
all or substantially all the property and assets of the Issuer or Hovnanian to
any other Person (whether or not affiliated with the Issuer or Hovnanian)
authorized to acquire and operate the same; provided, however, and the Issuer
and Hovnanian hereby covenant and agree, that any such consolidation, merger,
sale, lease, exchange or other disposition shall be upon the conditions that
(a) immediately after giving effect to such consolidation, merger, sale,
lease, exchange or other disposition of the Person (whether the Issuer or
Hovnanian or such other Person) formed by or surviving any such consolidation
or merger, or to which such sale, lease, exchange or other disposition shall
have been made, no Event of Default, and no event which after notice or lapse
of time or both, would become an Event of Default, shall have occurred and be
continuing; (b) the Person (if other than the Issuer or Hovnanian) formed by
or surviving any such consolidation or merger, or to which such sale, lease,
exchange or other disposition shall have been made, shall be a corporation or
partnership organized under the laws of the United States of America, any
state thereof or the District of Columbia; and (c) the due and punctual
payment of the principal of and interest, if any, on all the Securities,
according to their tenor, and the due and punctual performance and observance
of all of the covenants and conditions of this Indenture to be performed by
the Issuer or Hovnanian, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee executed and delivered to the Trustee, by
the Person (if other than the Issuer or Hovnanian) formed by such
consolidation, or into which the Issuer or Hovnanian shall have been merged,
or by the Person which shall have acquired or leased such property.
SECTION 9.2. Successor Corporation to be Substituted. In case of any
such consolidation or merger or any sale, conveyance or lease of all or
substantially all of the property of the Issuer or Hovnanian and upon the
assumption by the successor Person, by supplemental indenture executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
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due and punctual payment of the principal of, premium, if any, and interest,
if any, on all of the Securities and the due and punctual performance of all
of the covenants and conditions of this Indenture to be performed by the
Issuer or Hovnanian, such successor Person shall succeed to and be substituted
for the Issuer or Hovnanian, with the same effect as if it had been named
herein as the party of the first part, and the Issuer or Hovnanian (including
any intervening successor to the Issuer or Hovnanian which shall have become
the obligor hereunder) shall be relieved of any further obligation under this
Indenture and the Securities; provided, however, that in the case of a sale,
lease, exchange or other disposition of the property and assets of the Issuer
or Hovnanian (including any such intervening successor), the Issuer or
Hovnanian (including any such intervening successor) shall continue to be
liable on its obligations under this Indenture and the Securities to the
extent, but only to the extent, of liability to pay the principal of, premium,
if any, and interest, if any, on the Securities at the time, places and rate
prescribed in this Indenture and the Securities. Such successor Person
thereupon may cause to be signed, and may issue either in its own name or in
the name of the Issuer or Hovnanian, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Issuer or
Hovnanian and delivered to the Trustee; and, upon the order of such successor
Person instead of the Issuer or Hovnanian and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously shall have been
signed and delivered by the officers of the Issuer or Hovnanian to the Trustee
for authentication, and any Securities which such successor Person thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All
the Securities so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or thereafter
issued in accordance with the terms of this Indenture as though all of such
Securities had been issued at the date of the execution hereof.
In case of any such consolidation or merger or any sale, lease,
exchange or other disposition of all or substantially all of the property and
assets of the Issuer or Hovnanian, such changes in phraseology and form (but
not in substance) may be made in the Securities, thereafter to be issued, as
may be appropriate.
SECTION 9.3. Opinion of Counsel to be Given Trustee. The Trustee,
subject to Sections 6.1 and 6.2, shall receive an Officers' Certificate and
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, lease, exchange or other disposition and any such assumption complies
with the provisions of this Article Nine.
ARTICLE TEN
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 10.1. Applicability of Article. Unless specified otherwise
pursuant to Section 2.3 for Securities of a series, this Article shall apply
to each series of Securities issued under this Indenture.
SECTION 10.2. Legal Defeasance And Discharge. The Issuer shall,
subject to the satisfaction of the conditions set forth in Section 10.4
hereof, be deemed to have been discharged from its obligations with respect to
all Outstanding Securities on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Issuer shall be deemed to have paid and discharged
the entire Indebtedness represented
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by the Outstanding Securities, which shall thereafter be deemed to be
Outstanding only for the purposes of Section 10.5 hereof and the other
Sections of this Indenture referred to in clauses (a) and (b) below, and to
have satisfied all of its obligations under such Securities and this Indenture
(and the Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments delivered to it by the Issuer acknowledging the same),
except of the following provisions which shall survive until otherwise
terminated or discharged hereunder; (a) the rights of Holder of Outstanding
Securities to receive payments in respect of the principal of, premium, if
any, and interest on such Securities when such payments are due from the trust
referred to below; (b) the Issuer's obligations with respect to the Securities
concerning mutilated, destroyed, lost or stolen Securities and the maintenance
of an office or agency for payment and money for security payments held in
trust; (c) the rights, powers, trusts, duties and immunities of the Trustee,
and the Issuer's obligations in connection therewith; and (d) the Legal
Defeasance provisions of this Indenture.
SECTION 10.3. Covenant Defeasance. The Issuer shall, subject to the
satisfaction of the conditions set forth in Section 10.4 hereof, be released
from its obligations under the covenants contained in Articled Nine and to the
extent described in the applicable supplemental indenture, with respect to any
series of Securities, with respect to the Outstanding Securities on and after
the date of the conditions set forth in Section 10.4 are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not Outstanding for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed Outstanding
for all other purposes hereunder (it being understood that such Securities
shall not be deemed outstanding for accounting purposes). For this purpose,
Covenant Defeasance means that, with respect to the Outstanding Securities,
the Issuer may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall
not constitute a default or an Event of Default under Section 5.1 hereof, but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby. Subject to the satisfaction of the conditions set
forth in Section 10.4 hereof, Sections 5.1(e), 5.1(f) and 5.1(g) hereof shall
not constitute Events of Default or defaults hereunder.
SECTION 10.4. Conditions To Legal Or Covenant Defeasance. The
following shall be the conditions to the application of either Section 10.2 or
10.3 hereof to the Outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuer must irrevocably deposit, or cause to be deposited,
with the Trustee, in trust, for the benefit of the Holders of the Securities,
cash in U.S. dollars, U.S. Government Obligations, or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay, without
reinvestment, the principal of, premium, if any, and interest on the
Outstanding Securities on the stated maturity thereof or on the applicable
redemption date, as the case may be, and the Issuer must specify whether the
Securities are being defeased to maturity or to a particular redemption date;
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(b) in the case of Legal Defeasance, the Issuer must deliver to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming
that the Issuer has received from, or there has been published by, the
Internal Revenue Service a ruling, or there has been a change in the
applicable United States federal income tax law after the date of this
Indenture, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Holders of the Outstanding Securities will
not recognize income, gain or loss for United States federal income tax
purposes as a result of such Legal Defeasance, and will be subject to United
States federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(c) in the case of Covenant Defeasance, the Issuer must deliver to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the Outstanding Securities will not recognize
income, gain or loss for United States federal income tax purposes as a result
of such Covenant Defeasance, and such Holders will be subject to United States
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a default or Event of
Default resulting from the borrowing of funds to be applied to such deposit)
or insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under, any material
agreement or instrument (other than the Indenture) to which the Issuer or any
of its Restricted Subsidiaries is a party or by which the issuer or any of its
Restricted Subsidiaries is bound;
(f) the Issuer must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Issuer with the intent of
preferring the Holders of the Securities over other creditors of the Issuer,
or with the intent of defeating, hindering, delaying or defrauding creditors
of the Issuer or others;
(g) the Issuer must deliver to the Trustee an Officers' Certificate
and an opinion of Counsel in the United States reasonably acceptable to the
Trustee, each stating that the conditions precedent provided for or relating
to Legal Defeasance or Covenant Defeasance, as applicable, in the case of the
Officer's Certificate, in clauses (a) through (f) and, in the case of the
opinion of Counsel, in clauses (b) and (c) of this paragraph, have been
complied with.
SECTION 10.5. Deposited Money And Government Securities To Be Held
In Trust; Other Miscellaneous Provisions. Subject to Section 10.6 hereof, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively, and
solely for purposes of this Section 10.5, the "Trustee") pursuant to Section
10.4 hereof in respect of the outstanding Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Issuer acting as Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
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The Issuer shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable U.S.
Government Obligations deposited pursuant to Section 10.4 hereof or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
Outstanding Securities.
Anything in this Article Ten to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon the request
of the Issuer any money or non-callable U.S. Government Obligations held by it
as provided in Section 10.4 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 10.4(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 10.6. Repayment To Issuer. Any money deposited with the
Trustee or any Paying Agent, or then held by the Issuer, in trust for the
payment of the principal of, premium or interest on any Security and remaining
unclaimed for two years after such principal, and premium, if any, or interest
has become due and payable shall be paid to the Issuer on its request or (if
then held by the Issuer) shall be discharged from such trust; and the Holder
of such Security shall thereafter, as an unsecured creditor, look only to the
Issuer for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Issuer as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at
the expense of the Issuer cause to be published once, in the New York Times
and The Wall Street Journal (national edition), 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 notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer
SECTION 10.7. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or non-callable U.S. Government Obligations in
accordance with Section 10.2 or 10.3 hereof, as the case may be, by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Issuer's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 10.2 or 10.3
hereof until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 10.2 or 10.3 hereof, as the case may
be; provided, however, that, if the Issuer makes any payment of principal of,
premium, if any, or interest on any Security following the reinstatement of
its obligations, the Issuer shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money held by the Trustee
or Paying Agent.
SECTION 10.8. Survival. The Trustee's rights under this Article Ten
shall survive termination of this Indenture.
SECTION 10.9. Satisfaction and Discharge of Indenture. If at any
time (a) the Issuer shall have paid or caused to be paid the principal of,
premium, if any, and interest, if any, on all the Securities Outstanding
(other than Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.9) as and when the same
shall have become due and payable, or (b) the Issuer shall have delivered to
the Trustee for cancellation all
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Securities theretofore authenticated (other than Securities which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 2.9); and if, in any such case, the Issuer shall also pay or cause to
be paid all other sums payable hereunder by the Issuer (including all amounts,
payable to the Trustee pursuant to Section 6.6), then this Indenture shall
cease to be of further effect, and the Trustee, on demand of the Issuer
accompanied by an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent relating to the satisfaction and
discharge contemplated by this provision have been complied with, and at the
cost and expense of the Issuer, shall execute proper instruments acknowledging
such satisfaction and discharging this Indenture. The Issuer agrees to
reimburse the Trustee for any costs or expenses thereafter reasonably and
properly incurred, and to compensate the Trustee for any services thereafter
reasonably and properly rendered, by the Trustee in connection with this
Indenture or the Securities.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1. Partners, Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability. No recourse under or
upon any obligation, covenant or agreement contained in this Indenture, or in
any Security, or because of any indebtedness evidenced thereby, shall be had
against any incorporator, as such or against any past, present or future
stockholder, officer or director, as such, of the Issuer, or any partner of
the Issuer or of any successor, either directly or through the Issuer or any
successor, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of the Securities by the Holders thereof and as part of the
consideration for the issue of the Securities.
SECTION 11.2. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities. Nothing in this Indenture or in the
Securities, expressed or implied, shall give or be construed to give to any
Person, other than the parties hereto and their successors and the Holders of
the Securities, any legal or equitable right, remedy or claim under this
Indenture or under any covenant or provision herein contained, all such
covenants and provisions being for the sole benefit of the parties hereto and
their successors and of the Holders of the Securities.
SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Issuer shall bind its successors and assigns,
whether so expressed or not.
SECTION 11.4. Notices and Demands on Issuer, Trustee and Holders of
Securities. Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the Holders
of Securities to or on the Issuer, or as required pursuant to the Trust
Indenture Act of 1939, may be given or served by being deposited postage
prepaid, first-class mail (except as otherwise specifically provided herein)
addressed (until another address of the Issuer is filed by the Issuer with the
Trustee) to K. Hovnanian Enterprises, Inc., 10 Highway 35, P.O. Box 500, Red
Bank, New Jersey 07701. Any notice, direction, request or demand by the Issuer
or any Holder of Securities to or upon the Trustee shall be deemed to have
been sufficiently given or served by being deposited postage prepaid,
first-class mail (except as otherwise specifically provided herein) addressed
(until another address of the
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Trustee is filed by the Trustee with the Issuer) to First Union National Bank,
21 South Street, Morristown, New Jersey 07960, attention: Corporate Trust
Administration (K. Hovnanian Enterprises Inc. [specify series of
Securities])].
Where this Indenture provides for notice to Holders of Securities,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder entitled thereto, at his last address as it appears in the Security
register. Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Issuer when such
notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be reasonably satisfactory to
the Trustee shall be deemed to be sufficient notice.
SECTION 11.5. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, or as required pursuant to the Trust Indenture Act of 1939, the
Issuer or Hovnanian, as applicable, shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent have been complied with, except that in the case of any
such application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture (other
than a certificate provided pursuant to Section 4.3(d)) and delivered to the
Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition, (b) 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, (c) 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
opinion as to whether or not such covenant or condition has been complied
with, and (d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters, information with respect to which is
in the possession of the Issuer, or Hovnanian, as applicable, upon the
certificate, statement or opinion of or representations by an officer or
officers of the Issuer, or
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Hovnanian, as applicable, unless such counsel knows that the certificate,
statement or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or
Hovnanian, as applicable, or of counsel may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of or representations by an
accountant or firm of accountants in the employ of the Issuer or Hovnanian, as
applicable, unless such officer or counsel, as the case may be, knows that the
certificate or opinion or representations with respect to the accounting
matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.
SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays. If
the date of maturity of principal of or interest, if any, on the Securities of
any series or the date fixed for redemption, purchase or repayment of any such
Security shall not be a Business Day, then payment of interest, if any,
premium, if any, or principal need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made
on the date of maturity or the date fixed for redemption, purchase or
repayment, and, in the case of payment, no interest shall accrue for the
period after such date.
SECTION 11.7. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with another provision included in
this Indenture which is required to be included herein by any of Sections 310
to 317, inclusive, or is deemed applicable to this Indenture by virtue of the
provisions of the Trust Indenture Act of 1939, such required provision shall
control.
SECTION 11.8. GOVERNING LAW. THIS INDENTURE AND EACH SECURITY SHALL
BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 11.9. Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
SECTION 11.10. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1. Applicability of Article. The provisions of this
Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any
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sinking fund for the retirement of Securities of a series except as otherwise
specified, as contemplated by Section 2.3 for Securities of such series.
SECTION 12.2. Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Securities of any series to be redeemed as a
whole or in part at the option of the Issuer shall be given by mailing notice
of such redemption by first class mail, postage prepaid, at least 30 days and
not more than 60 days prior to the date fixed for redemption to such Holders
of Securities of such series at their last addresses as they shall appear in
the Security register. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or
not the Holder receives the notice. Failure to give notice by mail, or any
defect in the notice to the Holder of any Security of a series designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security of such series.
The notice of redemption to each such Holder shall specify (i) the
principal amount of each Security of such series held by such Holder to be
redeemed, (ii) the date fixed for redemption, (iii) the redemption price, (iv)
the place or places of payment, (v) the CUSIP number relating to such
Securities, (vi) that payment will be made upon presentation and surrender of
such Securities, (vii) whether such redemption is pursuant to the mandatory or
optional sinking fund, or both, if such be the case, (viii) whether interest,
if any, (or, in the case of Original Issue Discount Securities, original issue
discount) accrued to the date fixed for redemption will be paid as specified
in such notice and (ix) whether on and after said date interest, if any, (or,
in the case of Original Issue Discount Securities, original issue discount)
thereon or on the portions thereof to be redeemed will cease to accrue. In
case any Security of a series is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Security, a new Security or Securities of such series in
principal amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be redeemed
at the option of the Issuer shall be given by the Issuer or, at the Issuer's
request, by the Trustee in the name and at the expense of the Issuer.
On or before the redemption date specified in the notice of
redemption given as provided in this Section 12.2, the Issuer will deposit
with the Trustee or with one or more paying agents (or, if the Issuer is
acting as its own paying agent, set aside, segregate and hold in trust as
provided in Section 3.5) an amount of money sufficient to redeem on the
redemption date all the Securities of such series so called for redemption at
the appropriate redemption price, together with accrued interest, if any, to
the date fixed for redemption. The Issuer will deliver to the Trustee at least
45 days prior to the date fixed for redemption (unless a shorter notice period
shall be satisfactory to the Trustee) an Officers' Certificate stating the
aggregate principal amount of Securities to be redeemed. In case of a
redemption at the election of the Issuer prior to the expiration of any
restriction on such redemption, the Issuer shall deliver to the Trustee, prior
to the giving of any notice of redemption to Holders pursuant to this Section,
an Officers' Certificate stating that such restriction has been complied with.
If less than all the Securities of a series are to be redeemed, the
Trustee, within 10 Business Days after the Issuer gives written notice to the
Trustee that such redemption is to
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occur, shall select, in such manner as it shall deem appropriate and fair,
Securities of such series to be redeemed. Notice of the redemption shall be
given only after such selection has been made. Securities may be redeemed in
part in multiples equal to the minimum authorized denomination for Securities
of such series or any multiple thereof. The Trustee shall promptly notify the
Issuer in writing of the Securities of such series selected for redemption
and, in the case of any Securities of such series selected for partial
redemption, the principal amount thereof to be redeemed. For all purposes of
this Indenture, unless the context otherwise requires, all provisions relating
to the redemption of Securities of any series shall relate, in the case of any
Security redeemed or to be redeemed only in part, to the portion of the
principal amount of such Security which has been or is to be redeemed.
SECTION 12.3. Payment of Securities Called for Redemption. If notice
of redemption has been given as provided by this Article Twelve, the
Securities or portions of Securities specified in such notice shall become due
and payable on the date and at the place or places stated in such notice at
the applicable redemption price, together with interest, if any accrued to the
date fixed for redemption, and on and after said date (unless the Issuer shall
default in the payment of such Securities at the redemption price, together
with interest, if any, accrued to said date) interest, if any (or, in the case
of Original Issue Discount Securities, original issue discount), on the
Securities or portions of Securities so called for redemption shall cease to
accrue, and such Securities shall cease from and after the date fixed for
redemption (unless an earlier date shall be specified in a Board Resolution,
Officers' Certificate or executed supplemental indenture referred to in
Sections 2.1 and 2.3 by or pursuant to which the form and terms of the
Securities of such series were established) except as provided in Sections 6.5
and 10.4, to be entitled to any benefit or security under this Indenture, and
the Holders thereof shall have no right in respect of such Securities except
the right to receive the redemption price thereof and unpaid interest, if any,
to the date fixed for redemption. On presentation and surrender of such
Securities at a place of payment specified in said notice, said Securities or
the specified portions thereof shall be paid and redeemed by the Issuer at the
applicable redemption price, together with interest, if any, accrued thereon
to the date fixed for redemption; provided that payment of interest, if any,
becoming due on or prior to the date fixed for redemption shall be payable to
the Holders of Securities registered as such on the relevant record date
subject to the terms and provisions of Sections 2.3 and 2.7 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the redemption price shall, until paid or
duly provided for, bear interest from the date fixed for redemption at the
rate of interest or Yield to Maturity (in the case of an Original Issue
Discount Security) borne by such Security.
Upon presentation of any Security redeemed in part only, the Issuer
shall execute and the Trustee shall authenticate and deliver to or on the
order of the Holder thereof, at the expense of the Issuer, a new Security or
Securities of such series, and of like tenor, of authorized denominations, in
principal amount equal to the unredeemed portion of the Security so presented.
SECTION 12.4. Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and
certificate number in an Officers' Certificate delivered to the Trustee at
least 45 days prior to the last date on which notice of redemption may be
given as
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being owned of record and beneficially by, and not pledged or hypothecated by
either (a) the Issuer, or (b) a Person specifically identified in such written
statement as an Affiliate of the Issuer.
SECTION 12.5. Mandatory and Optional Sinking Funds. The minimum
amount of any sinking fund payment provided for by the terms of the Securities
of any series is herein referred to as a "mandatory sinking fund payment," and
any payment in excess of such minimum amount provided for by the terms of the
Securities of any series is herein referred to as an "optional sinking fund
payment." The date on which a sinking fund payment is to be made is herein
referred to as the "sinking fund payment date."
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Securities in cash, the Issuer may at
its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise
acquired (except as aforesaid) by the Issuer and delivered to the Trustee for
cancellation pursuant to Section 2.10, (b) receive credit for optional sinking
fund payments (not previously so credited) made pursuant to this Section 12.5,
or (c) receive credit for Securities of such series (not previously so
credited) redeemed by the Issuer through any optional redemption provision
contained in the terms of such series. Securities so delivered or credited
shall be received or credited by the Trustee at the sinking fund redemption
price specified in such Securities.
On or before the 60th day next preceding each sinking fund payment
date for any series, the Issuer will deliver to the Trustee an Officers'
Certificate (a) specifying the portion of the mandatory sinking fund payment
to be satisfied by payment of cash and the portion to be satisfied by credit
of Securities of such series and the basis for such credit, (b) stating that
none of the Securities of such series to be so credited has theretofore been
so credited, (c) stating that no defaults in the payment of interest or Events
of Default with respect to such series have occurred (which have not been
waived or cured or otherwise ceased to exist) and are continuing, and (d)
stating whether or not the Issuer intends to exercise its right to make an
optional sinking fund payment with respect to such series and, if so,
specifying the amount of such optional sinking fund payment which the Issuer
intends to pay on or before the next succeeding sinking fund payment date. Any
Securities of such series to be credited and required to be delivered to the
Trustee in order for the Issuer to be entitled to credit therefor as aforesaid
which have not theretofore been delivered to the Trustee shall be delivered
for cancellation pursuant to Section 2.10 to the Trustee with such Officers'
Certificate (or reasonably promptly thereafter if acceptable to the Trustee).
Such Officers' Certificate shall be irrevocable and upon its receipt by the
Trustee the Issuer shall become unconditionally obligated to make all the cash
payments or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Issuer, on or before any
such 60th day, to deliver such Officers' Certificate and Securities (subject
to the parenthetical clause in the second preceding sentence) specified in
this paragraph, if any, shall not constitute a default but shall constitute,
on and as of such date, the irrevocable election of the Issuer (i) that the
mandatory sinking fund payment for such series due on the next succeeding
sinking fund payment date shall be paid entirely in cash without the option to
deliver or credit Securities of such series in respect thereof, and (ii) that
the Issuer will
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make no optional sinking fund payment with respect to such series as provided
in this Section 12.5.
If the sinking fund payment or payments (mandatory or optional or
both) to be made in cash on the next succeeding sinking fund payment date plus
any unused balance of any preceding sinking fund payments made in cash shall
exceed $50,000, or a lesser sum if the Issuer shall so request with respect to
the Securities of any particular series, such cash shall be applied on the
next succeeding sinking fund payment date to the redemption of Securities of
such series at the sinking fund redemption price together with accrued
interest, if any, to the date fixed for redemption. If such amount shall be
$50,000 or less and the Issuer makes no such request, then it shall be carried
over until a sum in excess of $50,000 is available. The Trustee shall select,
in the manner provided in Section 12.2, for redemption on such sinking fund
payment date a sufficient principal amount of Securities of such series to
absorb said cash, as nearly as may be, and shall (if requested in writing by
the Issuer) inform the Issuer of the serial numbers of the Securities of such
series (or portions thereof) so selected. The Issuer, or the Trustee, in the
name and at the expense of the Issuer (if the Issuer shall so request the
Trustee in writing) shall cause notice of redemption of the Securities of such
series to be given in substantially the manner provided in Section 12.2 (and
with the effect provided in Section 12.3) for the redemption of Securities of
such series in part at the option of the Issuer. The amount of any sinking
fund payments not so applied or allocated to the redemption of Securities of
such series shall be added to the next cash sinking fund payment for such
series and, together with such payment, shall be applied in accordance with
the provisions of this Section 12.5. Any and all sinking fund moneys held on
the stated maturity date of the Securities of any particular series (or
earlier, if such maturity is accelerated), which are not held for the payment
or redemption of particular Securities of such series shall be applied,
together with other moneys, if necessary, sufficient for the purpose, to the
payment of the principal of, and interest, if any, on, the Securities of such
series at maturity.
On or before each sinking fund payment date, the Issuer shall pay to
the Trustee in cash or shall otherwise provide for the payment of all
interest, if any, accrued to the date fixed for redemption on Securities to be
redeemed on such sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities
of a series with sinking fund moneys or give any notice of redemption of
Securities for such series by operation of the sinking fund during the
continuance of a default in payment of interest on such Securities or of any
Event of Default with respect to such series except that, where the giving of
notice of redemption of any Securities shall theretofore have been made, the
Trustee shall redeem or cause to be redeemed such Securities, provided that it
shall have received from the Issuer a sum sufficient for such redemption.
Except as aforesaid, any moneys in the sinking fund for such series at the
time when any such default or Event of Default known to a Responsible Officer
of the Trustee shall occur, and any moneys thereafter paid into the sinking
fund, shall, during the continuance of such default or Event of Default, be
deemed to have been collected under Article Five and held for the payment of
all such Securities. In case such Event of Default shall have been waived as
provided in Section 5.7 or the default cured on or before the 60th day
preceding the sinking fund payment date in any year, such moneys shall
thereafter be applied on the next succeeding sinking fund payment date in
accordance with this Section to the redemption of such Securities.
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ARTICLE THIRTEEN
GUARANTEES
SECTION 13.1. Applicability of Article. The provisions of this
Article shall be applicable to Hovnanian and to each of the Guarantors
specified pursuant to Section 2.3 for the Guarantee of Securities of a series.
SECTION 13.2. Guarantee. Each Guarantor of a particular series of
Securities hereby unconditionally guarantees (each such guarantee to be
referred to herein as a "Guarantee"), jointly and severally with each other
Guarantor of the Securities of that series, if any, to each Holder of such
Securities authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
this Indenture, such Securities or the obligations of the Company hereunder or
thereunder, (i) the due and punctual payment of the principal of and any
premium or interest on such Securities, whether at maturity or on an interest
payment date, by acceleration, pursuant to an offer to purchase such
Securities or otherwise, and interest on the overdue principal of and
interest, if any, on such Securities, if lawful, and all other obligations of
the Company to the Holders of such Securities or the Trustee hereunder or
thereunder shall be promptly paid in full, all in accordance with the terms
hereof and thereof including all amounts payable to the Trustee under Section
6.6 hereof, and (ii) in case of any extension of time of payment or renewal of
any such Securities or any of such other obligations, the same shall be
promptly paid in full when due or to be performed in accordance with the terms
of the extension or renewal, whether at stated maturity, by acceleration or
otherwise.
If the Company fails to make any payment when due of any amount so
guaranteed for whatever reason, the Guarantor of the Securities of that series
shall be obligated, jointly and severally with each other Guarantor, if any,
to pay the same immediately. Each Guarantor hereby agrees that its obligations
hereunder shall be continuing, absolute and unconditional, irrespective of,
and shall be unaffected by, the validity, regularity or enforceability of the
Securities, this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Securities or the Trustee with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of such
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, demand of performance, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding
first against the Company, the benefit of discussion, protest, notice and all
demand whatsoever and covenants that its Guarantee shall not be discharged
except by complete performance of the obligations contained in the Securities
guaranteed by such Guarantee, in this Indenture and in this Article 13. If any
Holder of Securities of a series guaranteed hereby or the Trustee is required
by any court or otherwise to return to the Company or any Guarantor of such
Securities, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor, any amount paid by the
Company or any Guarantor of such Securities to the Trustee or such Holder,
this Article 13, to the extent theretofore discharged with respect to any
Guarantee of such Securities, shall be reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Securities of a series guaranteed
hereby by such
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Guarantor in respect of any obligations guaranteed hereby by such Guarantee
until payment in full of all such obligations. Each Guarantor further agrees
that, as between such Guarantor, on the one hand, and the Holders of
Securities of a series guaranteed hereby by such Guarantor and the Trustee on
the other hand, (i) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 5 hereof for the purposes of such
Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby
and (ii) in the event of any acceleration of such obligations as provided in
Article 5 hereof such obligations (whether or not due and payable) shall
forthwith become due and payable by such Guarantor, jointly severally with any
other Guarantor of such Securities, for the purpose of this Article 13. In
addition, without limiting the foregoing, upon the effectiveness of an
acceleration under Article 5, the Trustee may make a demand for payment on the
Securities under any Guarantee provided hereunder and not discharged.
With respect to each Guarantee by a Guarantor, such Guarantor shall
be subrogated to all rights of the Holder of any Securities guaranteed hereby
by such Guarantee against the Company in respect of any amounts paid to such
Holder by such Guarantor pursuant to the provisions of such Guarantee;
provided that the 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 and interest on all such Securities shall have been paid in full.
The Guarantee set forth in this Section 13.1 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by the
Trustee or any duly appointed agent.
The Guarantees provided in this Section 13.1 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by the
Trustee or any duly appointed agent.
SECTION 13.3. Obligations of the Guarantor Unconditional. Nothing
contained in this Article 13 or elsewhere in this Indenture or in any Security
is intended to or shall impair, as between a Guarantor and the Holders of the
Securities guaranteed by such Guarantor's Guarantee, the obligations of such
Guarantor, which are absolute and unconditional, to pay to such Holders the
principal of and interest on the Securities as and when the same shall become
due and payable in accordance with the provisions of this Guarantee or is
intended to or shall affect the relative rights of such Holders and creditors
of such Guarantor, nor shall anything herein or therein prevent the Trustee or
such Holder from exercising all remedies otherwise permitted by applicable law
upon Default under this Indenture in respect of cash, property or securities
of such Guarantor received upon the exercise of any such remedy;
Upon any distribution of assets of a Guarantor referred to in this
Article 13, the Trustee, subject to the provisions of Sections 6.1 and 6.2,
and the Holders of the Securities guaranteed hereby by such Guarantor shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the Trustee or to
such Holders, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of other indebtedness of such
Guarantor, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this
Article 13.
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SECTION 13.4. Article 13 Not To Prevent Events of Default. The
failure to make a payment on account of principal or interest on the
Securities of any series by reason of any provision in this Article 13 shall
not be construed as preventing the occurrence of an Event of Default under
Section 5.1.
SECTION 13.5. Execution and Delivery of Guarantee. To evidence a
Guarantee set forth in this Article 13, the Guarantor hereby agrees that the
Guarantee Notation, substantially in the form of Exhibit A hereto, shall be
endorsed on each Security authenticated and delivered by the Trustee that is
guaranteed by such Guarantee and that this Indenture shall be executed on
behalf of such Guarantor by its Chairman of the Board, its President or one of
its Vice Presidents under a facsimile of its seal reproduced thereon.
Each Guarantor hereby agrees that its Guarantee shall remain in full
force and effect notwithstanding any failure to endorse the Guarantee Notation
on each such Security.
If an officer whose signature is on this Indenture or on the
Securities guaranteed hereby no longer holds that office at the time the
Trustee authenticates the Security on which a notation of the Guarantee is
endorsed, such Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of each
Guarantee thereof.
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This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first written above.
-61-
K. HOVNANIAN ENTERPRISES, INC.
By _____________________________
[title]
[CORPORATE SEAL]
Attest:
________________________________
Secretary
[CORPORATE SEAL]
HOVNANIAN ENTERPRISES, INC.
GUARANTOR
By _____________________________
[title]
[CORPORATE SEAL]
Attest:
________________________________
Secretary
[CORPORATE SEAL]
FIRST UNION NATIONAL BANK, AS TRUSTEE
By _____________________________
[title]
Attest:
- --------------------------------
Trust Officer
-62-
EXHIBIT A
[FORM OF NOTATION OF SECURITY
RELATING TO GUARANTEE]
GUARANTEE
[Name of Guarantor] (hereinafter referred to as the "Guarantor",
which term includes any successor person under the Indenture (the "Indenture")
referred to in the Security upon which this notation is endorsed) (the
"Endorsed Security"), has unconditionally guaranteed (i) the due and punctual
payment of the principal of, premium, if any, and interest on the Endorsed
Security and all other Securities of the same series as the Endorsed Security
(the "Guaranteed Securities"), whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal
of, premium, if any, and interest, if any, on the Guaranteed Securities, to
the extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders of Guaranteed Securities or the
Trustee all in accordance with the terms set forth in Article 13 of the
Indenture and (ii) in case of any extension of time of payment or renewal of
any Guaranteed Securities or any of such other obligations, that the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture.
The obligations of the Guarantor to the Holders of Guaranteed
Securities and to the Trustee pursuant to the Guarantee evidenced hereby and
the Indenture are expressly set forth in Article 13 of the Indenture and
reference is hereby made to such Indenture for the terms of such Guarantee.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any personal liability under
the Guarantee evidenced hereby by reason of his or its status as such
stockholder, officer, director or incorporator.
The Guarantee evidenced hereby shall not be valid or obligatory for
any purpose until the certificate of authentication of the Guaranteed
Securities shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
Guarantor
[SEAL]
[NAME OF GUARANTOR]
By_____________________
By_____________________
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EXHIBIT B
[SUBSIDIARY GUARANTORS]
EXHIBIT 4.7
===============================================================================
K. HOVNANIAN ENTERPRISES, INC.
Issuer
and
HOVNANIAN ENTERPRISES, INC.
Guarantor
and
SUBSIDIARY GUARANTORS OF HOVNANIAN
Guarantors
and
FIRST UNION NATIONAL BANK,
as Trustee
----------------------------
INDENTURE
Dated as of ___________ ___, 2001
FORM OF SENIOR SUBORDINATED INDENTURE
===============================================================================
CROSS REFERENCE SHEET*
---------------
Provisions of Trust Indenture Act of 1939 and Indenture to be dated
as of _____ among K. HOVNANIAN ENTERPRISES, INC., HOVNANIAN ENTERPRISES, INC.,
SUBSIDIARY GUARANTORS OF HOVNANIAN and FIRST UNION NATIONAL BANK, as Trustee:
Section of the Act Section of Indenture
- ------------------ --------------------
310(a)(1), (2) and (5).......... 6.9
310(a)(3) and (4)............... Inapplicable
310(b).......................... 6.8 and 6.10(a), (b) and (d)
310(c).......................... Inapplicable
311(a).......................... 6.13
311(b).......................... 6.13
311(c).......................... Inapplicable
312(a).......................... 4.1 and 4.2(a)
312(b).......................... 4.2(a) and (b)(i) and (ii)
312(c).......................... 4.2(c)
313(a).......................... 4.4(a)(i), (ii), (iii), (iv), (v), (vi) and
(vii)
313(a)(5)....................... Inapplicable
313(b)(1)....................... Inapplicable
313(b)(2)....................... 4.4(b)
313(c).......................... 4.4(c)
313(d).......................... 4.4(d)
314(a).......................... 4.3
314(b).......................... Inapplicable
314(c)(1) and (2)............... 11.5
314(c)(3)....................... Inapplicable
314(d).......................... Inapplicable
314(e).......................... 11.5
314(f).......................... Inapplicable
315(a), (c) and (d)............. 6.1
315(b).......................... 5.8
315(e).......................... 5.9
316(a)(1)....................... 5.7
316(a)(2)....................... Not required
316(a) (last sentence).......... 7.4
316(b).......................... 5.4
317(a).......................... 5.2
317(b).......................... 3.5(a)
318(a).......................... 11.7
- ---------------------
* This Cross Reference Sheet is not part of the Indenture.
Table of Contents
Page
ARTICLE ONE DEFINITIONS
"Affiliate"..................................................................2
"Authenticating Agent".......................................................2
"Bankruptcy Code"............................................................2
"Board of Directors".........................................................2
"Board Resolution"...........................................................2
"Business Day"...............................................................2
"Commission".................................................................2
"Consolidated Net Tangible Assets"...........................................2
"Corporate Trust Office".....................................................3
"Covenant Defeasance"........................................................3
"Depositary".................................................................3
"Dollars"....................................................................3
"Eligible Guarantors"........................................................3
"Exchange Act"...............................................................3
"Event of Default"...........................................................3
"Global Security"............................................................3
"Guarantee"..................................................................3
"Guarantor"..................................................................3
"Holder", "Holder of Securities", "Securityholder"...........................3
"Hovnanian"..................................................................3
"Indebtedness"...............................................................3
"Indenture"..................................................................4
"interest"...................................................................4
"Issuer".....................................................................4
"Issuer Order"...............................................................4
"Legal Defeasure"............................................................4
"Officers' Certificate"......................................................4
"Opinion of Counsel".........................................................4
"original issue date"........................................................5
"original issue discount"....................................................5
"Original Issue Discount Security"...........................................5
"Outstanding"................................................................5
"Periodic Offering"..........................................................5
"Person".....................................................................6
"Place of Payment"...........................................................6
"principal"..................................................................6
"principal amount"...........................................................6
"record date"................................................................6
"Responsible Officer"........................................................6
"Restricted Subsidiary"......................................................6
"Securities Act".............................................................6
"Security" or "Securities"...................................................6
"Senior Indebtedness"........................................................6
"Senior Subordinated Indebtedness"...........................................7
"Subordinated Indebtedness"..................................................7
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Page
"Significant Subsidiary".....................................................7
"Subsidiary".................................................................7
"Trust Indenture Act of 1939"................................................7
"Trustee"....................................................................7
"Unrestricted Subsidiary"....................................................7
"U.S. Government Obligations"................................................7
"vice president".............................................................7
"Yield to Maturity"..........................................................8
ARTICLE TWO SECURITIES
SECTION 2.1. Forms Generally.................................................8
SECTION 2.2. Form of Trustee's Certificate of Authentication.................8
SECTION 2.3. Amount Unlimited Issuable in Series.............................9
SECTION 2.4. Authentication and Delivery of Securities......................11
SECTION 2.5. Execution of Securities........................................13
SECTION 2.6. Certificate of Authentication..................................14
SECTION 2.7. Denomination and Date of Securities; Payments of Interest......14
SECTION 2.8. Registration, Transfer and Exchange............................15
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen Securities......16
SECTION 2.10. Cancellation of Securities; Disposition Thereof...............17
SECTION 2.11. Temporary Securities..........................................17
SECTION 2.12. CUSIP Numbers.................................................18
ARTICLE THREE COVENANTS
SECTION 3.1. Payment of Principal and Interest..............................18
SECTION 3.2. Offices for Notices and Payments, etc..........................18
SECTION 3.3. No Interest Extension..........................................18
SECTION 3.4. Appointments to Fill Vacancies in Trustee's Office.............18
SECTION 3.5. Provision as to Paying Agent...................................18
ARTICLE FOUR SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER, HOVNANIAN AND THE TRUSTEE
SECTION 4.1. Issuer and Hovnanian to Furnish Trustee Information
as to Names and Addresses of Securityholders.......................19
SECTION 4.2. Preservation and Disclosure of Securityholders Lists...........20
SECTION 4.3. Reports by the Issuer and Hovnanian............................21
SECTION 4.4. Reports by the Trustee.........................................21
ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITY
HOLDERS ON EVENT OF DEFAULT
SECTION 5.1. Events of Default..............................................22
SECTION 5.2. Payment of Securities on Default; Suit Therefor................24
SECTION 5.3. Application of Moneys Collected by Trustee.....................25
SECTION 5.4. Proceedings by Securityholders.................................26
SECTION 5.5. Proceedings by Trustee.........................................26
SECTION 5.6. Remedies Cumulative and Continuing.............................26
SECTION 5.7. Direction of Proceedings; Waiver of Defaults by Majority
of Securityholders.................................................27
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Page
SECTION 5.8. Notice of Defaults.............................................27
SECTION 5.9. Undertaking to Pay Costs.......................................27
ARTICLE SIX CONCERNING THE TRUSTEE
SECTION 6.1. Duties and Responsibilities of the Trustee; During
Default; Prior to Default....................................28
SECTION 6.2. Certain Rights of the Trustee..................................28
SECTION 6.3. Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds Thereof.............29
SECTION 6.4. Trustee and Agents May Hold Securities; Collections, etc.......30
SECTION 6.5. Moneys Held by Trustee.........................................30
SECTION 6.6. Compensation and Indemnification of Trustee and Its
Prior Claim..................................................30
SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc.........30
SECTION 6.8. Qualification of Trustee; Conflicting Interests................31
SECTION 6.9. Persons Eligible for Appointment as Trustee; Different
Trustees for Different Series................................31
SECTION 6.10. Resignation and Removal; Appointment of Successor Trustee.....31
SECTION 6.11. Acceptance of Appointment by Successor Trustee................32
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee.........................................33
SECTION 6.13. Preferential Collection of Claims Against the Issuer..........34
SECTION 6.14. Appointment of Authenticating Agent...........................34
ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS
SECTION 7.1. Evidence of Action Taken by Securityholders....................34
SECTION 7.2. Proof of Execution of Instruments and of Holding of Securities.35
SECTION 7.3. Holders to be Treated as Owners................................35
SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding..............35
SECTION 7.5. Right of Revocation of Action Taken............................36
SECTION 7.6. Record Date for Consents and Waivers...........................36
ARTICLE EIGHT SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of Securityholders.....36
SECTION 8.2. Supplemental Indentures with Consent of Securityholders........38
SECTION 8.3. Effect of Supplemental Indenture...............................39
SECTION 8.4. Documents to Be Given to Trustee...............................39
SECTION 8.5. Notation on Securities in Respect of Supplemental Indentures...39
ARTICLE NINE CONSOLIDATION, MERGER, SALE, LEASE,
EXCHANGE OR OTHER DISPOSITION
SECTION 9.1. Consolidation Permitted, etc., on Certain Terms................39
SECTION 9.2. Successor Corporation to be Substituted........................40
SECTION 9.3. Opinion of Counsel to be Given Trustee.........................40
ARTICLE TEN LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 10.1. Applicability of Article......................................41
SECTION 10.2. Legal Defeasance And Discharge................................41
SECTION 10.3. Covenant Defeasance...........................................41
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Page
SECTION 10.4. Conditions To Legal Or Covenant Defeasance....................41
SECTION 10.5. Deposited Money And Government Securities To Be
Held In Trust; Other Miscellaneous Provisions...............42
SECTION 10.6. Repayment To Issuer...........................................43
SECTION 10.7. Reinstatement.................................................43
SECTION 10.8. Survival......................................................43
SECTION 10.9. Satisfaction and Discharge of Indenture.......................43
ARTICLE ELEVEN MISCELLANEOUS PROVISIONS
SECTION 11.1. Partners, Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability........44
SECTION 11.2. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities...........................44
SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture...........44
SECTION 11.4. Notices and Demands on Issuer, Trustee and
Holders of Securities..............................................44
SECTION 11.5. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein.................................45
SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays...............45
SECTION 11.7. Conflict of Any Provision of Indenture with
Trust Indenture Act of 1939........................................46
SECTION 11.8. GOVERNING LAW.................................................46
SECTION 11.9. Counterparts..................................................46
SECTION 11.10. Effect of Headings...........................................46
ARTICLE TWELVE REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1. Applicability of Article......................................46
SECTION 12.2. Notice of Redemption; Partial Redemptions.....................46
SECTION 12.3. Payment of Securities Called for Redemption...................47
SECTION 12.4. Exclusion of Certain Securities from Eligibility for
Selection for Redemption....................................48
SECTION 12.5. Mandatory and Optional Sinking Funds..........................48
ARTICLE THIRTEEN SUBORDINATION
SECTION 13.1. Securities Subordinated to Senior Indebtedness................50
SECTION 13.2. Reliance on Certificate of Liquidating Agent;
Further Evidence as to Ownership of Senior Indebtedness.....52
SECTION 13.3. Payment Permitted If No Default...............................52
SECTION 13.4. Disputes with Holders of Certain Senior Indebtedness..........53
SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition.............53
SECTION 13.6. Trustee to Effectuate Subordination...........................53
SECTION 13.7. Rights of Trustee as Holder of Senior Indebtedness............54
SECTION 13.8. Article Applicable to Paying Agents...........................54
SECTION 13.9. Subordination Rights Not Impaired by Acts or
Omissions of the Issuer or Holders of Senior Indebtedness...54
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.....54
ARTICLE FOURTEEN SUBORDINATED GUARANTEE
SECTION 14.1. Applicability of Article......................................54
SECTION 14.2. Guarantee.....................................................54
SECTION 14.3. Guarantee Subordinated to Senior Debt of the Guarantor........56
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Page
SECTION 14.4. Guarantors Not to Make Payments With Respect to
Securities in Certain Circumstances.........................57
SECTION 14.5. Guarantee Subordinated to Prior Payment of All Senior Debt
of each Guarantor on Dissolution, Winding Up, Liquidation or
Reorganization of a Guarantor...............................58
SECTION 14.6. Holders to be Subrogated to Rights of Holders of
Senior Debt of each Guarantor...............................60
SECTION 14.7. Obligations of each Guarantor Unconditional...................60
SECTION 14.8. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice...........................................61
SECTION 14.9. Application by Trustee of Monies Deposited with It............61
SECTION 14.10. Subordination Rights Not Impaired by Acts or Omissions
of a Guarantor or Holders of Senior Debt of such
Guarantor..................................................61
SECTION 14.11. Holders Authorize Trustee to Effectuate
Subordination of Securities................................62
SECTION 14.12. Right of Trustee to Hold Senior Debt of a Guarantor..........62
SECTION 14.13. Trustee Not Fiduciary for Holders of Senior Debt
of a Guarantor.............................................62
SECTION 14.14. Article 14 Not To Prevent Events of Default..................62
SECTION 14.15. Execution and Delivery of Guarantee..........................62
SECTION 14.16. Subordination of Indebtedness Owed by the Company
to a Guarantor.............................................63
SECTION 14.17. Officers' Certificate........................................63
-v-
FORM OF SENIOR SUBORDINATED INDENTURE
FORM OF SENIOR SUBORDINATED INDENTURE, dated as of ____ ___, 2001
among K. Hovnanian Enterprises, Inc., a New Jersey corporation (the "Issuer"),
Hovnanian Enterprises, Inc., a Delaware Corporation ("Hovnanian"), Subsidiary
Guarantors of Hovnanian and FIRST UNION NATIONAL BANK, as trustee (the
"Trustee").
RECITALS OF THE ISSUER:
WHEREAS, the Issuer has duly authorized the issuance from time to
time of its unsecured debentures, notes or other evidences of indebtedness to
be issued in one or more series (the "Securities") up to such principal amount
or amounts as may from time to time be authorized in accordance with the terms
of this Indenture; and
WHEREAS, the Issuer has duly authorized the execution and delivery
of this Indenture to provide, among other things, for the authentication,
delivery and administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been undertaken and
completed.
RECITALS OF GUARANTORS:
WHEREAS, each Guarantor desires to make the Guarantees provided for
herein; and
WHEREAS, all things necessary to make this Indenture a valid
agreement of each of the Guarantors, in accordance with its terms, have been
done and the Guarantor will do all things necessary to make the Guarantees,
when executed by each of the Guarantors and endorsed on the Securities
authenticated and delivered hereunder, the valid obligations of each Guarantor
as hereinafter provided.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows:
ARTICLE ONE
DEFINITIONS
For all purposes of this Indenture and of any indenture supplemental
hereto the following terms shall have the respective meanings specified in
this Section 1.1 (except as otherwise expressly provided herein or in any
indenture supplemental hereto or unless the context otherwise clearly
requires). All other terms used in this Indenture that are defined in the
Trust Indenture Act of 1939, including terms defined therein by reference to
the Securities Act of 1933, as amended (the "Securities Act"), shall have the
meanings assigned to such terms in said Trust Indenture Act of 1939 and in the
Securities Act as in force at the date of this Indenture (except as otherwise
expressly provided herein or in any indenture supplemental hereto or unless
the context otherwise clearly requires).
All accounting terms used herein and not expressly defined shall
have the meanings assigned to such terms in accordance with generally accepted
accounting principles, and the term
"generally accepted accounting principles" means such accounting principles as
are generally accepted on the date of this Indenture.
The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. The expressions "date of this
Indenture", "date hereof", "date as of which this Indenture is dated" and
"date of execution and delivery of this Indenture" and other expressions of
similar import refer to the effective date of the original execution and
delivery of this Indenture, viz. as of _____________________.
The terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" shall have the meaning set forth in Section
6.14.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 United
States Code ss.ss.101 et seq., or any successor statute thereto.
"Board of Directors" means when used with reference to the Issuer or
Hovnanian, as the case may be, the board of directors or any duly authorized
committee of that board or any director or directors and/or officer or
officers to whom that board or committee shall have duly delegated its
authority.
"Board Resolution" means (1) one or more resolutions, certified by
the secretary or an assistant secretary of the Issuer or Hovnanian, as
applicable, to have been duly adopted or consented to by the Board of
Directors of the Issuer or Hovnanian, as applicable, and to be in full force
and effect, or (2) a certificate signed by the director or directors and/or
officer or officers to whom the Board of Directors or any duly authorized
committee of that Board shall have duly delegated its authority, in each case
delivered to the Trustee for the Securities of any series.
"Business Day" means, with respect to any Security, unless otherwise
specified in a Board Resolution and an Officers Certificate with respect to a
particular series of Securities, a day that (a) in the Place of Payment (or in
any of the Places of Payment, if more than one) in which amounts are payable,
as specified in the form of such Security, and (b) in the city in which the
Corporate Trust Office is located, is not a day on which banking institutions
are authorized or required by law or regulation to close.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
as amended, or, if at any time after the execution and delivery of this
Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act of 1939, then the body performing
such duties on such date.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets included on the most recent consolidated balance sheet of the Issuer
and its Restricted Subsidiaries, less applicable reserves and other properly
deductible items and after deducting therefrom (a) all current liabilities and
-2-
(b) all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles, all in accordance with generally
accepted accounting principles consistently applied.
"Corporate Trust Office" means the office of the Trustee of a series
of Securities at which the trust created by this Indenture shall, at any
particular time, be principally administered, which office is, at the date as
of which this Indenture is dated, located at [address].
"Covenant Defeasance" has the meaning set forth in Section 10.3.
"Depositary" means, with respect to the Securities of any series
issuable or issued in the form of one or more Global Securities, the Person
designated as Depositary by the Issuer pursuant to Section 2.3 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or
include each Person who is then a Depositary hereunder, and, if at any time
there is more than one such Person, "Depositary" as used with respect to the
Securities of any such series shall mean the Depositary with respect to the
Global Securities of such series.
"Dollars" and the sign "$" means the coin and currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
"Eligible Guarantors" means Hovnanian and each of the other entities
listed on Exhibit B hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Event of Default" means any event or condition specified as such in
Section 5.1.
"Global Security" means a Security evidencing all or a part of a
series of Securities issued to the Depositary for such series in accordance
with Section 2.3 and bearing the legend prescribed in Section 2.4.
"Guarantee" has the meaning specified in Section 14.2.
"Guarantor" has the meaning specified in Section 2.3.
"Holder", "Holder of Securities", "Securityholder" or other similar
terms mean, in the case of any Security, the Person in whose name such
Security is registered in the security register kept by the Issuer for that
purpose in accordance with the terms hereof.
"Hovnanian" means Hovnanian Enterprises, Inc., a Delaware
corporation.
"Indebtedness" with respect to any Person, means, without
duplication:
(a) (i) the principal of and premium, if any, and interest, if
any, on indebtedness for money borrowed of such Person, indebtedness
of such Person evidenced by bonds, notes, debentures or similar
obligations, and any guaranty by such Person of any indebtedness for
money borrowed or indebtedness evidenced by bonds, notes, debentures
or similar obligations of any other Person, whether any such
indebtedness or guaranty is outstanding on the date of this
Indenture or is thereafter created, assumed or incurred, (ii)
obligations of such Person for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit
transaction; (iii) the principal of and premium, if
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any, and interest, if any, on indebtedness incurred, assumed or
guaranteed by such Person in connection with the acquisition by it
or any of its subsidiaries of any other businesses, properties or
other assets; (iv) lease obligations which such Person capitalizes
in accordance with Statement of Financial Accounting Standards No.
13 promulgated by the Financial Accounting Standards Board or such
other generally accepted accounting principles as may be from time
to time in effect; (v) any indebtedness of such Person representing
the balance deferred and unpaid of the purchase price of any
property or interest therein (except any such balance that
constitutes an accrued expense or trade payable) and any guaranty,
endorsement or other contingent obligation of such Person in respect
of any indebtedness of another that is outstanding on the date of
this Indenture or is thereafter created, assumed or incurred by such
Person; and (vi) obligations of such Person under interest rate,
commodity or currency swaps, caps, collars, options and similar
arrangements; and
(b) any amendments, modifications, refundings, renewals or
extensions of any indebtedness or obligation described as
Indebtedness in clause (a) above.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, including, for all purposes of this instrument and any
such supplement, the provisions of the Trust Indenture Act of 1939 that are
deemed to be a part of and govern this instrument and any such supplement,
respectively, and shall include the forms and terms of particular series of
Securities established as contemplated hereunder.
"interest" means, when used with respect to non-interest bearing
Securities (including, without limitation, any Original Issue Discount
Security that by its terms bears interest only after maturity or upon default
in any other payment due on such Security), interest payable after maturity
(whether at stated maturity, upon acceleration or redemption or otherwise) or
after the date, if any, on which the Issuer becomes obligated to acquire a
Security, whether upon conversion, by purchase or otherwise.
"Issuer" means K. Hovnanian Enterprises, Inc., a New Jersey
corporation, and, subject to Article Nine, its successors and assigns.
"Issuer Order" means a written statement, request or order of the
Issuer which is signed in its name by the chairman of the Board of Directors,
the president or any vice president of the Issuer, and delivered to the
Trustee.
"Legal Defeasure", has the meaning specified in Section 10.2.
"Officers' Certificate", when used with respect to the Issuer or
Hovnanian, means a certificate signed by the chairman of the Board of
Directors, the president, or any vice president and by the treasurer, any
assistant treasurer, the controller, any assistant controller, the secretary
or any assistant secretary of the Issuer or Hovnanian, as the case may be.
Each such certificate shall include the statements provided for in Section
11.5 if and to the extent required by the provisions of such Section 11.5. One
of the officers signing an Officers' Certificate given pursuant to Section 4.3
shall be the principal executive, financial or accounting officer of the
Issuer or Hovnanian, as the case may be.
"Opinion of Counsel" means an opinion in writing signed by the chief
counsel of the Issuer or by such other legal counsel who may be an employee of
or counsel to the Issuer or Hovnanian and who shall be reasonably satisfactory
to the Trustee. Each such opinion shall include the statements provided for in
Section 11.5, if and to the extent required by the provisions of such Section
11.5.
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"original issue date" of any Security (or portion thereof) means the
earlier of (a) the date of such Security or (b) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly)
on registration of transfer, exchange or substitution.
"original issue discount" of any debt security, including any
Original Issue Discount Security, means the difference between the principal
amount of such debt security and the initial issue price of such debt security
(as set forth in the case of an Original Issue Discount Security on the face
of such Security).
"Original Issue Discount Security" means any Security that provides
for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the maturity thereof pursuant to Article
Five.
"Outstanding" when used with reference to Securities, shall, subject
to the provisions of Section 7.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities (other than Securities of any series as to which
the provisions of Article Ten hereof shall not be applicable), or
portions thereof, for the payment or redemption of which moneys or
U.S. Government Obligations (as provided for in Section 10.1) in the
necessary amount shall have been deposited in trust with the Trustee
or with any paying agent (other than the Issuer) or shall have been
set aside, segregated and held in trust by the Issuer for the
Holders of such Securities (if the Issuer shall act as its own
paying agent), provided that, if such Securities, or portions
thereof, are to be redeemed prior to the maturity thereof, notice of
such redemption shall have been given as herein provided, or
provision satisfactory to the Trustee shall have been made for
giving such notice; and
(c) Securities which shall have been paid or in substitution
for which other Securities shall have been authenticated and
delivered pursuant to the terms of Section 2.9 (except with respect
to any such Security as to which proof satisfactory to the Trustee
is presented that such Security is held by a Person in whose hands
such Security is a legal, valid and binding obligation of the
Issuer).
In determining whether the Holders of the requisite aggregate
principal amount of Outstanding Securities of any or all series have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding for such purposes shall be the portion of
the principal amount thereof that would be due and payable as of the date of
such determination (as certified by the Issuer to the Trustee) upon a
declaration of acceleration of the maturity thereof pursuant to Article Five.
"Periodic Offering" means an offering of Securities of a series from
time to time, the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the stated
maturity or maturities thereof and the redemption provisions, if any, with
respect thereto, are to be determined by the Issuer or its agents upon the
issuance of such Securities.
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"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and interest, if any,
on the Securities of such series are payable as determined in accordance with
Section 2.3.
"principal" of a debt security, including any Security, means the
amount (including, without limitation, if and to the extent applicable, any
premium and, in the case of an Original Issue Discount Security, any accrued
original issue discount, but excluding interest) that is payable with respect
to such debt security as of any date and for any purpose (including, without
limitation, in connection with any sinking fund, if any, upon any redemption
at the option of the Issuer, upon any purchase or exchange at the option of
the Issuer or the holder of such debt security and upon any acceleration of
the maturity of such debt security).
"principal amount" of a debt security, including any Security, means
the principal amount as set forth on the face of such debt security.
"record date" shall have the meaning set forth in Section 2.7.
"Responsible Officer", when used with respect to the Trustee of a
series of Securities, means any officer of the Trustee with direct
responsibility for the administration of the trust created by this Indenture.
"Restricted Subsidiary" means (a) any Subsidiary of the Issuer other
than an Unrestricted Subsidiary, and (b) any Subsidiary of the Issuer which
was an Unrestricted Subsidiary but which, subsequent to the date hereof, is
designated by the Issuer (by Board Resolution) to be a Restricted Subsidiary;
provided, however, that the Issuer may not designate any such Subsidiary to be
a Restricted Subsidiary if the Issuer would thereby breach any covenant or
agreement herein contained (on the assumptions that any outstanding
Indebtedness of such Subsidiary was incurred at the time of such designation).
"Securities Act" shall have the meaning set forth in Section 1.1.
"Security" or "Securities" has the meaning stated in the first
recital of this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture; provided, however that if at
any time there is more than one Person acting as Trustee under this
Instrument, "Securities" with respect to the Indenture as to which such Person
is Trustee shall have the meaning stated in the first recital of this
instrument and shall more particularly mean Securities authenticated and
delivered under this instrument, exclusive, however, of Securities of any
series as to which such Person is not Trustee.
"Senior Indebtedness" means Indebtedness of the Issuer outstanding
at any time (other than the Indebtedness evidenced by the Securities of any
series) except (a) any Indebtedness as to which, by the terms of the
instrument creating or evidencing such Indebtedness, it is provided that such
Indebtedness is not senior or prior in right of payment to the Securities or
is pari passu or subordinate by its terms in right of payment to the
Securities, (b) renewals, extensions and modifications of any such
Indebtedness, (c) any Indebtedness of the Issuer to a wholly-owned Subsidiary
of the Issuer, (d) interest accruing after the filing of a petition initiating
any proceeding referred to in Sections 5.1(e) and 5.1(f)
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unless such interest is an allowed claim enforceable against the Issuer in a
proceeding under federal or state bankruptcy laws and (e) trade payables.
"Senior Subordinated Indebtedness" means the Securities and any
other Indebtedness of the Issuer that ranks pari passu with the Securities.
Any Indebtedness of the Issuer that is subordinate or junior by its terms in
right of payment to any other Indebtedness of the Issuer shall be subordinate
to Senior Subordinated Indebtedness unless the instrument creating or
evidencing the same or pursuant to which the same is outstanding specifically
provides that such Indebtedness (i) is to rank pari passu with other Senior
Subordinated Indebtedness and (ii) is not subordinated by its terms to any
Indebtedness of the Issuer which is not Senior Indebtedness.
"Subordinated Indebtedness" means the Securities, any other Senior
Subordinated Indebtedness and any other Indebtedness that is subordinate or
junior in right of payment to Senior Indebtedness.
"Significant Subsidiary" means any Subsidiary which is a
"significant subsidiary" of the Issuer within the meaning of Rule 1.02(w) of
Regulation S-K promulgated by the Commission as in effect on the date of this
Indenture.
"Subsidiary" of any specified Person means any corporation of which
such Person, or such Person and one or more Subsidiaries of such Person, or
any one or more Subsidiaries of such Person, directly or indirectly own voting
securities entitling any one or more of such Persons and its Subsidiaries to
elect a majority of the directors, either at all times or, so long as there is
no default or contingency which permits the holders of any other class or
classes of securities to vote for the election of one or more directors.
"Trust Indenture Act of 1939" (except as otherwise provided in
Sections 8.1 and 8.2) means the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990, as in force at the date as of which this
Indenture is originally executed.
"Trustee" means the Person identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Six, shall also
include any successor trustee. "Trustee" shall also mean or include each
Person who is then a trustee hereunder and, if at any time there is more than
one such Person, "Trustee" as used with respect to the Securities of any
series shall mean the trustee with respect to the Securities of such series.
"Unrestricted Subsidiary" means (a) any Subsidiary of the Issuer
acquired or organized after the date hereof, provided, however, that such
Subsidiary of the Issuer shall not be a successor, directly or indirectly, to
any Restricted Subsidiary, and (b) any Subsidiary of the Issuer substantially
all the assets of which consist of stock or other securities of a Subsidiary
or Subsidiaries of the Issuer of the character described in clause (a) of this
paragraph, unless and until such Subsidiary shall have been designated to be a
Restricted Subsidiary pursuant to clause (b) of the definition of "Restricted
Subsidiary".
"U.S. Government Obligations" shall have the meaning set forth in
Section 10.1(B).
"vice president", when used with respect to the Issuer or the
Trustee, means any vice president, regardless of whether designated by a
number or a word or words added before or after the title "vice president."
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"Yield to Maturity" means the yield to maturity on a series of
Securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with generally accepted financial practice or as
otherwise provided in the terms of such series of Securities.
ARTICLE TWO
SECURITIES
SECTION 2.1. Forms Generally. The Securities of each series shall be
substantially in such form (not inconsistent with this Indenture) as shall be
established by or pursuant to one or more Board Resolutions (as set forth in a
Board Resolution or, to the extent established pursuant to rather than set
forth in a Board Resolution, an Officers' Certificate detailing such
establishment) or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have
imprinted or otherwise reproduced thereon such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may
be required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities as evidenced by their
execution of such Securities.
SECTION 2.2. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be
substantially as follows:
This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
________________________, as Trustee
By_______________________________
Authorized Signatory
If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Securities of such series shall
bear, in addition to the Trustee's certificate of authentication, an alternate
Certificate of Authentication which shall be substantially as follows:
This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
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________________________, as Trustee
By_______________________________
as Authenticating Agent
By_______________________________
Authorized Signatory
SECTION 2.3. Amount Unlimited Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series and the
Securities of each such series shall rank equally and pari passu with the
Securities of each other series, but all Securities issued hereunder shall be
subordinate and junior in right of payment, to the extent and in the manner
set forth in Article Thirteen, to all Senior Indebtedness of the Issuer. There
shall be established in or pursuant to one or more Board Resolutions (and, to
the extent established pursuant to rather than set forth in a Board
Resolution, in an Officers' Certificate detailing such establishment) or
established in one or more indentures supplemental hereto, prior to the
initial issuance of Securities of any series:
(1) the designation of the Securities of the series, which shall
distinguish the Securities of such series from the Securities of all
other series;
(2) any limit upon the aggregate principal amount of the Securities
of the series that may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5 or
12.3);
(3) the date or dates on which the principal of the Securities of
the series is payable;
(4) the rate or rates at which the Securities of the series shall
bear interest, if any, the date or dates from which any such interest
shall accrue, on which any such interest shall be payable and on which a
record shall be taken for the determination of Holders to whom any such
interest is payable or the method by which such rate or rates or date or
dates shall be determined or both;
(5) the place or places where and the manner in which the principal
of, premium, if any, and interest, if any, on Securities of the series
shall be payable (if other than as provided in Section 3.2) and the
office or agency for the Securities of the series maintained by the
Issuer pursuant to Section 3.2;
(6) the right, if any, of the Issuer to redeem, purchase or repay
Securities of the series, in whole or in part, at its option and the
period or periods within which, the price or prices (or the method by
which such price or prices shall be determined or both) at which, the
form or method of payment therefor if other than in cash and any terms
and conditions upon which and the manner in which (if different from the
provisions of Article Twelve) Securities of the series may be so
redeemed, purchased or repaid, in whole or in part pursuant to any
sinking fund or otherwise;
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(7) the obligation, if any, of the Issuer to redeem, purchase or
repay Securities of the series in whole or in part pursuant to any
mandatory redemption, sinking fund or analogous provisions or at the
option of a Holder thereof and the period or periods within which the
price or prices (or the method by which such price or prices shall be
determined or both) at which, the form or method of payment therefor if
other than in cash and any terms and conditions upon which and the manner
in which (if different from the provisions of Article Twelve) Securities
of the series shall be redeemed, purchased or repaid, in whole or in
part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(9) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
acceleration of the maturity thereof;
(10) whether Securities of the series will be issuable as Global
Securities;
(11) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions, the
form and terms of such certificates, documents or conditions;
(12) any trustees, depositaries, authenticating or paying agents,
transfer agents or registrars or any other agents with respect to the
Securities of such series;
(13) any deleted, modified or additional events of default or
remedies or any deleted, modified or additional covenants with respect to
the Securities of such series;
(14) whether the provisions of Article Ten will be not applicable to
Securities of such series;
(15) any provision relating to the issuance of Securities of such
series at an original issue discount (including, without limitation, the
issue price thereof, the rate or rates at which such original issue
discount shall accrete, if any, and the date or dates from or to which or
period or periods during which such original issue discount shall accrete
at such rate or rates);
(16) if other than Dollars, the foreign currency in which payment of
the principal of, premium, if any, and interest, if any, on the
Securities of such series shall be payable;
(17) if other than First Union National Bank is to act as Trustee
for the Securities of such series, the name and Corporate Trust Office of
such Trustee;
(18) if the amounts of payments of principal of, premium, if any,
and interest, if any, on the Securities of such series are to be
determined with reference to an index, the manner in which such amounts
shall be determined;
(19) the terms for conversion or exchange, if any, with respect to
the Securities of such series;
(20) which, if any, of the Eligible Guarantors, in addition to
Hovnanian, shall guarantee the Securities on the terms set forth in
Article Fourteen (Hovnanian, together with each of the
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other Eligible Guarantors that guarantee the Securities set forth in
Article Fourteen, if any, a "Guarantor"); and
(21) any other terms of the series.
All Securities of any one series shall be substantially identical,
except as to denomination and except as may otherwise be provided by or
pursuant to the Board Resolution or Officers' Certificate referred to above or
as set forth in any such indenture supplemental hereto. All Securities of any
one series need not be issued at the same time and may be issued from time to
time, consistent with the terms of this Indenture, if so provided by or
pursuant to such Board Resolution, such Officers' Certificate or in any such
indenture supplemental hereto.
Any such Board Resolution or Officers' Certificate referred to above
with respect to Securities of any series filed with the Trustee on or before
the initial issuance of the Securities of such series shall be incorporated
herein by reference with respect to Securities of such series and shall
thereafter be deemed to be a part of the Indenture for all purposes relating
to Securities of such series as fully as if such Board Resolution or Officers'
Certificate were set forth herein in full.
SECTION 2.4. Authentication and Delivery of Securities. The Issuer
may deliver Securities of any series executed by the Issuer to the Trustee for
authentication together with the applicable documents referred to below in
this Section 2.4, and the Trustee shall thereupon authenticate and deliver
such Securities to, or upon the order of the Issuer (contained in the Issuer
Order referred to below in this Section 2.4) or pursuant to such procedures
acceptable to the Trustee and to such recipients as may be specified from time
to time by an Issuer Order. The maturity date, original issue date, interest
rate, if any, and any other terms of the Securities of such series shall be
determined by or pursuant to such Issuer Order and procedures. If provided for
in such procedures and agreed to by the Trustee, such Issuer Order may
authorize authentication and delivery pursuant to oral instructions from the
Issuer or its duly authorized agent, which instructions shall be promptly
confirmed in writing. In authenticating the Securities of such series and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive (in the case of
subparagraphs (2), (3) and (4) below only at or before the time of the first
request of the Issuer to the Trustee to authenticate Securities of such
series) and (subject to Section 6.1) shall be fully protected in relying upon,
unless and until such documents have been superseded or revoked:
(1) an Issuer Order requesting such authentication and setting forth
delivery instructions provided that, with respect to Securities of a
series subject to a Periodic Offering, (a) such Issuer Order may be
delivered by the Issuer to the Trustee prior to the delivery to the
Trustee of such Securities for authentication and delivery, (b) the
Trustee shall authenticate and deliver Securities of such series for
original issue from time to time, in an aggregate principal amount not
exceeding the aggregate principal amount established for such series,
pursuant to an Issuer Order or pursuant to procedures acceptable to the
Trustee as may be specified from time to time by an Issuer Order, (c) the
maturity date or dates, original issue date or dates, interest rate or
rates, if any, and any other terms of Securities of such series shall be
determined by an Issuer Order or pursuant to such procedures, (d) if
provided for in such procedures, such Issuer Order may authorize
authentication and delivery pursuant to oral or electronic instructions
from the Issuer or its duly authorized agent or agents, which oral
instructions shall be promptly confirmed in writing and (e) after the
original issuance of the first Security of such series to be issued, any
separate request by the Issuer that the Trustee authenticate Securities
of such series for original issuance will be deemed to be a certification
by the Issuer that it is in compliance with all conditions precedent
provided for in this Indenture relating to the authentication and
delivery of such Securities;
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(2) the Board Resolution, Officers' Certificate or executed
supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant
to which the forms and terms of the Securities of such series were
established;
(3) an Officers' Certificate setting forth the form or forms and
terms of the Securities stating that the form or forms and terms of the
Securities have been established pursuant to Sections 2.1 and 2.3 and
comply with this Indenture and covering such other matters as the Trustee
may reasonably request; and
(4) at the option of the Issuers, either an Opinion of Counsel, or a
letter from legal counsel addressed to the Trustee permitting it to rely
on an Opinion of Counsel, substantially to the effect that:
(a) the form or forms of the Securities of such series have
been duly authorized and established in conformity with the
provisions of this Indenture;
(b) in the case of an underwritten offering, the terms of the
Securities of such series have been duly authorized and established
in conformity with the provisions of this Indenture, and, in the
case of an offering that is not underwritten, certain terms of the
Securities of such series have been established pursuant to a Board
Resolution, an Officers' Certificate or a supplemental indenture in
accordance with this Indenture, and when such other terms as are to
be established pursuant to procedures set forth in an Issuer Order
shall have been established, all such terms will have been duly
authorized by the Issuer and will have been established in
conformity with the provisions of this Indenture;
(c) when the Securities of such series have been executed by
the Issuer and the Securities of such series have been authenticated
by the Trustee in accordance with the provisions of this Indenture
and delivered to and duly paid for by the purchasers thereof, they
will have been duly issued under this Indenture and will be valid
and legally binding obligations of the Issuer, enforceable in
accordance with their respective terms, and will be entitled to the
benefits of this Indenture; and
(d) the execution and delivery by the Issuer of, and the
performance by the Issuer of its obligations under, the Securities
of such series will not contravene any provision of applicable law
or the articles of incorporation or bylaws of the Issuer or any
agreement or other instrument binding upon the Issuer or any of its
Subsidiaries that is material to the Issuer and its Subsidiaries,
considered as one enterprise, or, to such counsel's knowledge after
the inquiry indicated therein (which shall be reasonable), any
judgment, order or decree of any governmental agency or any court
having jurisdiction over the Issuer or any Subsidiary of the Issuer,
and no consent, approval or authorization of any governmental body
or agency is required for the performance by the Issuer of its
obligations under the Securities, except such as are specified and
have been obtained and such as may be required by the securities or
blue sky laws of the various states in connection with the offer and
sale of the Securities.
In addition, if the authentication and delivery relates to a new
series of Securities created by an indenture supplemental hereto, such Opinion
of Counsel shall also state that all laws and requirements with respect to the
form and execution by the Issuer of the supplemental indenture with respect to
the series of Securities have been complied with, the Issuer has corporate
power to execute and deliver any such supplemental indenture and has taken all
necessary corporate action for those purposes
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and any such supplemental indenture has been executed and delivered and
constitutes the legal, valid and binding obligation of the Issuer enforceable
in accordance with its terms.
In rendering such opinions, such counsel may qualify any opinions as
to enforceability by stating that such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium and other
similar laws affecting the rights and remedies of creditors and is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the State of New
Jersey and the federal law of the United States, upon opinions of other
counsel (copies of which shall be delivered to the Trustee), who shall be
counsel reasonably satisfactory to the Trustee, in which case the opinion
shall state that such counsel believes that both such counsel and the Trustee
are entitled so to rely. Such counsel may also state that, insofar as such
opinion involves factual matters, such counsel has relied, to the extent such
counsel deems proper, upon certificates of officers of the Issuer and its
Subsidiaries and certificates of public officials.
The Trustee shall have the right to decline to authenticate and
deliver any Securities of any series under this Section 2.4 if the Trustee,
being advised by counsel, determines that such action may not lawfully be
taken by the Issuer, or if the Trustee in good faith by its board of directors
or board of trustees, executive committee or a trust committee of directors or
trustees or Responsible Officers shall determine that such action would expose
the Trustee to personal liability to existing Holders or would adversely
affect the Trustee's own rights, duties or immunities under the Securities,
this Indenture or otherwise.
If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Global
Securities, then the Issuer shall execute and the Trustee shall, in accordance
with this Section 2.4 and the Issuer Order with respect to such series,
authenticate and deliver one or more Global Securities that (i) shall
represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series to be issued in the
form of Global Securities and not yet cancelled, (ii) shall be registered in
the name of the Depositary for such Global Security or Securities or the
nominee of such Depositary, (iii) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions, and (iv) shall bear
a legend substantially to the following effect: "Unless and until it is
exchanged in whole or in part for Securities in definitive registered form,
this Security may not be transferred except as a whole by the Depositary to
the 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."
Each Depositary designated pursuant to Section 2.3 must, at the time
of its designation and at all times while it serves as Depositary, be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and any other applicable statute or regulation.
Reference is made to Section 14.15 concerning execution and delivery
of the Guarantees.
SECTION 2.5. Execution of Securities. The Securities shall be signed
on behalf of the Issuer by the chairman of the Board of Directors, the
president, any vice president or the treasurer of the Issuer, under its
corporate seal which may, but need not, be attested by its secretary or one of
its assistant secretaries. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. The seal of the Issuer
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of a seal or any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.
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In case any officer of the Issuer who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall
be authenticated and delivered by the Trustee or disposed of by the Issuer,
such Security nevertheless may be authenticated and delivered or disposed of
as though the person who signed such Security had not ceased to be such
officer of the Issuer; and any Security may be signed on behalf of the Issuer
by such persons as, at the actual date of the execution of such Security,
shall be the proper officers of the Issuer, although at the date of the
execution and delivery of this Indenture any such person was not such an
officer.
Reference is made to Section 14.15 concerning execution and delivery
of the Guarantees.
SECTION 2.6. Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by the manual signature of one
of its authorized signatories, or its Authenticating Agent, shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
The execution of such certificate by the Trustee or its Authenticating Agent
upon any Security executed by the Issuer shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture. Each
reference in this Indenture to authentication by the Trustee includes
authentication by an agent appointed pursuant to Section 6.14.
Reference is made to Section 14.15 concerning execution and delivery
of the Guarantees.
SECTION 2.7. Denomination and Date of Securities; Payments of
Interest. The Securities of each series shall be issuable in registered form
in denominations established as contemplated by Section 2.3 or, with respect
to the Securities of any series, if not so established, in denominations of
$1,000 and any integral multiple thereof. The Securities of each series shall
be numbered, lettered or otherwise distinguished in such manner or in
accordance with such plan as the officers of the Issuer executing the same may
determine with the approval of the Trustee, as evidenced by the execution and
authentication thereof.
Each Security shall be dated the date of its authentication. The
Securities of each series shall bear interest, if any, from the date, and such
interest, if any, shall be payable on the dates, established as contemplated
by Section 2.3.
The Person in whose name any Security of any series is registered at
the close of business on any record date applicable to a particular series
with respect to any interest payment date for such series shall be entitled to
receive the interest, if any, payable on such interest payment date
notwithstanding any transfer or exchange of such Security subsequent to the
record date and prior to such interest payment date, except if and to the
extent the Issuer shall default in the payment of the interest due on such
interest payment date for such series, in which case such defaulted interest
shall be paid to the Persons in whose names Outstanding Securities for such
series are registered (a) at the close of business on a subsequent record date
(which shall be not less than five Business Days prior to the date of payment
of such defaulted interest) established by notice given by mail by or on
behalf of the Issuer to the Holders of Securities not less than 15 days
preceding such subsequent record date or (b) as determined by such other
procedure as is mutually acceptable to the Issuer and the Trustee. The term
"record date" as used with respect to any interest payment date (except a date
for payment of defaulted interest) for the Securities of any series shall mean
the date specified as such in the terms of the Securities of such series
established as contemplated by Section 2.3, or, if no such date is so
established, if such interest payment date is the first day of a calendar
month, the fifteenth day of the next preceding calendar month or, if such
interest payment date is the fifteenth day of a calendar month, the first day
of such calendar month, whether or not such record date is a Business Day.
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SECTION 2.8. Registration, Transfer and Exchange. The Issuer will
keep at each office or agency to be maintained for the purpose as provided in
Section 3.2 for each series of Securities a register or registers in which,
subject to such reasonable regulations as it may prescribe, it will provide
for the registration of Securities of each series and the registration of
transfer of Securities of such series. Each such register shall be in written
form in the English language or in any other form capable of being converted
into such form within a reasonable time. At all reasonable times such register
or registers shall be open for inspection and available for copying by the
Trustee.
Upon due presentation for registration of transfer of any Security
of any series at any such office or agency to be maintained for the purpose as
provided in Section 3.2, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities of the same series, maturity date, interest rate, if
any, and original issue date in authorized denominations for a like aggregate
principal amount.
All Securities presented for registration of transfer shall (if so
required by the Issuer or the Trustee) be duly endorsed by, or be accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Issuer and the Trustee duly executed by, the Holder or his attorney duly
authorized in writing.
At the option of the Holder thereof, Securities of any series (other
than a Global Security, except as set forth below) may be exchanged for a
Security or Securities of such series having authorized denominations and an
equal aggregate principal amount, upon surrender of such Securities to be
exchanged at the agency of the Issuer that shall be maintained for such
purpose in accordance with Section 3.2.
The Issuer may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
registration of transfer of Securities. No service charge shall be made for
any such transaction or for any exchange of Securities of any series as
contemplated by the immediately preceding paragraph.
The Issuer shall not be required to exchange or register a transfer
of (a) any Securities of any series for a period of 15 days next preceding the
first mailing or publication of notice of redemption of Securities of such
series to be redeemed, (b) any Securities selected, called or being called for
redemption, in whole or in part, except, in the case of any Security to be
redeemed in part, the portion thereof not so to be redeemed or (c) any
Security if the Holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Security in whole or in part, except the portion of
such Security not required to be repurchased.
Notwithstanding any other provision of this Section 2.8, unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, a Global Security representing all or a part of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series
or a nominee of such successor Depositary.
If at any time the Depositary for any Securities of a series
represented by one or more Global Securities notifies the Issuer that it is
unwilling or unable to continue as Depositary for such Securities or if at any
time the Depositary for such Securities shall no longer be eligible under
Section 2.4, the Issuer shall appoint a successor Depositary with respect to
such Securities. If a successor Depositary for such Securities is not
appointed by the Issuer within 90 days after the Issuer receives such notice
or becomes aware of such ineligibility, the Issuer's election pursuant to
Section 2.3 that such Securities be
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represented by one or more Global Securities shall no longer be effective and
the Issuer shall execute, and the Trustee, upon receipt of an Issuer Order for
the authentication and delivery of definitive Securities of such series, will
authenticate and deliver Securities of such series in definitive registered
form, in any authorized denominations, in an aggregate principal amount equal
to the principal amount of the Global Security or Securities representing such
Securities in exchange for such Global Security or Securities.
The Issuer may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global
Securities shall no longer be represented by a Global Security or Securities.
In such event the Issuer shall execute, and the Trustee, upon receipt of an
Issuer Order for the authentication and delivery of definitive Securities of
such series, shall authenticate and deliver, Securities of such series in
definitive registered form, in any authorized denominations, in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities representing such Securities, in exchange for such Global Security
or Securities.
If specified by the Issuer pursuant to Section 2.3 with respect to
Securities represented by a Global Security, the Depositary for such Global
Security may surrender such Global Security in exchange in whole or in part
for Securities of the same series in definitive registered form on such terms
as are acceptable to the Issuer and such Depositary. Thereupon, the Issuer
shall execute, and the Trustee shall authenticate and deliver, without service
charge,
(i) to the Person specified by such Depositary, a new Security
or Securities of the same series, of any authorized denominations as
requested by such Person, in an aggregate principal amount equal to
and in exchange for such Person's beneficial interest in the Global
Security; and
(ii) to such Depositary a new Global Security in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of
Securities authenticated and delivered pursuant to clause (i) above.
Upon the exchange of a Global Security for Securities in definitive
registered form in authorized denominations, such Global Security shall be
cancelled by the Trustee or an agent of the Trustee. Securities in definitive
registered form issued in exchange for a Global Security pursuant to this
Section 2.8 shall be registered in such names and in such authorized
denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Trustee or the Issuer or an agent of
the Issuer. The Trustee or such agent shall deliver at its office such
Securities to or as directed by the Persons in whose names such Securities are
so registered.
All Securities issued upon any registration of transfer or exchange
of Securities shall be valid and legally binding obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall become
mutilated, defaced or be destroyed, lost or stolen, the Issuer in its
discretion may execute, and upon the written request of any officer of the
Issuer, the Trustee shall authenticate and deliver a new Security of the same
series, maturity date, interest rate, if any, and original issue date, bearing
a number or other distinguishing symbol not contemporaneously outstanding, in
exchange and substitution for the mutilated or defaced Security, or in lieu of
and in substitution for the Security so destroyed, lost or stolen. In every
case the applicant for a substitute Security shall furnish to the Issuer and
to the Trustee and any agent of the Issuer or the Trustee such security or
indemnity as may
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be required by the Trustee or the Issuer or any such agent to indemnify and
defend and to save each of the Trustee and the Issuer and any such agent
harmless and, in every case of destruction, loss or theft, evidence to their
satisfaction of the destruction, loss or theft of such Security and of the
ownership thereof and in the case of mutilation or defacement, shall surrender
the Security to the Trustee or such agent.
Upon the issuance of any substitute Security, the Issuer may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee or its agent) connected therewith. In case
any Security which has matured or is about to mature or has been called for
redemption in full shall become mutilated or defaced or be destroyed, lost or
stolen, the Issuer may instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the
case of a mutilated or defaced Security), if the applicant for such payment
shall furnish to the Issuer and to the Trustee and any agent of the Issuer or
the Trustee such security or indemnity as any of them may require to hold each
of them harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to the Issuer and the Trustee and any agent of
the Issuer or the Trustee evidence to the Trustee's satisfaction of the
destruction, loss or theft of such Security and of the ownership thereof.
Every substitute Security of any series issued pursuant to the
provisions of this Section by virtue of the fact that any such Security is
destroyed, lost or stolen shall constitute an additional contractual
obligation of the Issuer, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone and shall be entitled to
all the benefits of (but shall be subject to all the limitations of rights set
forth in) this Indenture equally and proportionately with any and all other
Securities of such series duly authenticated and delivered hereunder. All
Securities shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, defaced, destroyed, lost or stolen
Securities and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments
or other securities without their surrender.
SECTION 2.10. Cancellation of Securities; Disposition Thereof. All
Securities surrendered for payment, redemption, registration of transfer or
exchange, or for credit against any payment in respect of a sinking or
analogous fund, if surrendered to the Issuer or any agent of the Issuer or the
Trustee or any agent of the Trustee, shall be delivered to the Trustee or its
agent for cancellation or, if surrendered to the Trustee, shall be cancelled
by it; and no Securities shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture. The Trustee shall
dispose of all cancelled Securities in accordance with its standard procedures
and shall deliver a certificate of such disposition to the Company. If the
Issuer or its agent shall acquire any of the Securities, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are delivered to the
Trustee or its agent for cancellation.
SECTION 2.11. Temporary Securities. Pending the preparation of
definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be
issuable in any authorized denomination, and substantially in the form of the
definitive Securities of such series but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Issuer with the concurrence of the Trustee as evidenced by
the execution and authentication thereof. Temporary Securities may contain
such references to any provisions of this Indenture as may be appropriate.
Every temporary Security shall be executed by the Issuer and be authenticated
by the Trustee upon the same conditions and in substantially the same manner,
and with like effect, as the definitive Securities. Without unreasonable delay
the Issuer shall execute and shall furnish
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definitive Securities of such series and thereupon temporary Securities of
such series may be surrendered in exchange therefor without charge at each
office or agency to be maintained by the Issuer for that purpose pursuant to
Section 3.2 and the Trustee shall authenticate and deliver in exchange for
such temporary Securities of such series an equal aggregate principal amount
of definitive Securities of the same series having authorized denominations.
Until so exchanged, the temporary Securities of any series shall be entitled
to the same benefits under this Indenture as definitive Securities of such
series, unless otherwise established pursuant to Section 2.3.
SECTION 2.12. CUSIP Numbers. The Issuer in issuing the Securities
may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Securities
or as contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Securities, and any
such redemption shall not be affected by any defect in or omission of such
numbers.
ARTICLE THREE
COVENANTS
SECTION 3.1. Payment of Principal and Interest. The Issuer covenants
and agrees that it will duly and punctually pay or cause to be paid the
principal of, premium, if any, and interest, if any, on each of the Securities
at the place, at the respective times and in the manner provided in the
Securities.
SECTION 3.2. Offices for Notices and Payments, etc. So long as any
of the Securities are Outstanding, the Issuer and Hovnanian will maintain in
each Place of Payment, an office or agency where the Securities may be
presented for payment, an office or agency where the Securities may be
presented for registration of transfer and for exchange as provided in this
Indenture, and an office or agency where notices and demands to or upon the
Issuer and Hovnanian in respect of the Securities or of this Indenture may be
served. In case the Issuer shall at any time fail to maintain any such office
or agency, or shall fail to give notice to the Trustee of any change in the
location thereof, presentation may be made and notice and demand may be served
in respect of the Securities or of this Indenture at the Corporate Trust
Office. The Issuer hereby initially designates the Corporate Trust Office for
each such purpose and appoints the Trustee as registrar and paying agent and
as the agent upon whom notices and demands may be served with respect to the
Securities.
SECTION 3.3. No Interest Extension. In order to prevent any
accumulation of claims for interest after maturity thereof, the Issuer will
not directly or indirectly extend or consent to the extension of the time for
the payment of any claim for interest on any of the Securities and will not
directly or indirectly be a party to or approve any such arrangement by the
purchase or funding of said claims or in any other manner; provided, however,
that this Section 3.3 shall not apply in any case where an extension shall be
made pursuant to a plan proposed by the Issuer to the Holders of all
Securities of any series then Outstanding.
SECTION 3.4. Appointments to Fill Vacancies in Trustee's Office. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of the
Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 3.5. Provision as to Paying Agent. (a) If the Issuer shall
appoint a paying agent other than the Trustee, it will cause such paying agent
to execute and deliver to the Trustee an
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instrument in which such paying agent shall agree with the Trustee, subject to
the provisions of this Section 3.5,
(1) that it will hold all sums held by it as such paying agent for
the payment of the principal of or interest, if any, on the Securities
(whether such sums have been paid to it by the Issuer or by any other
obligor on the Securities) in trust for the benefit of the Holders of the
Securities and the Trustee; and
(2) (that it will give the Trustee notice of any failure by the
Issuer (or by any other obligor on the Securities) to make any payment of
the principal of, premium, if any, or interest, if any, on the Securities
when the same shall be due and payable; and
(3) that it will, at any time during the continuance of any such
failure, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such paying agent.
(b) If the Issuer shall act as its own paying agent, it will, on or
before each due date of the principal of or interest, if any, on the
Securities, set aside, segregate and hold in trust for the benefit of the
Holders of the Securities a sum sufficient to pay such principal, premium, if
any, or interest, if any, so becoming due and will notify the Trustee of any
failure to take such action and of any failure by the Issuer (or by any other
obligor under the Securities) to make any payment of the principal of,
premium, if any, or interest, if any, on the Securities when the same shall
become due and payable.
(c) Anything in this Section 3.5 to the contrary notwithstanding,
the Issuer may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid
to the Trustee all sums held in trust by it, or any paying agent hereunder, as
required by this Section 3.5, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 3.5 to the contrary notwithstanding,
any agreement of the Trustee or any paying agent to hold sums in trust as
provided in this Section 3.5 is subject to Sections 10.3 and 10.4.
(e) Whenever the Issuer shall have one or more paying agents, it
will, on or before each due date of the principal of or interest, if any, on
any Securities, deposit with a paying agent a sum sufficient to pay the
principal, premium, if any, or interest, if any, so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such principal,
premium, if any, or interest, if any, and (unless such paying agent is the
Trustee) the Issuer will promptly notify the Trustee of its action or failure
so to act.
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER, HOVNANIAN AND THE TRUSTEE
SECTION 4.1. Issuer and Hovnanian to Furnish Trustee Information as
to Names and Addresses of Securityholders. The Issuer and Hovnanian and any
other obligor on the Securities covenant and agree that they will furnish or
cause to be furnished to the Trustee a list in such form as the Trustee may
reasonably require of the names and addresses of the Holders of the Securities
of each series:
(a) semiannually and not more than 15 days after each January 1 and
July 1, and
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(b) at such other times as the Trustee may request in writing,
within 15 days after receipt by the Issuer of any such request,
provided that if and so long as the Trustee shall be the registrar for such
series, such list shall not be required to be furnished.
SECTION 4.2. Preservation and Disclosure of Securityholders Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders of
each series of Securities (i) contained in the most recent list furnished to
it as provided in Section 4.1, and (ii) received by it in the capacity of
registrar or paying agent for such series, if so acting. The Trustee may
destroy any list furnished to it as provided in Section 4.1 upon receipt of a
new list so furnished.
(b) In case three or more Holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to
the Trustee reasonable proof that each such applicant has owned a Security for
a period of at least six months preceding the date of such application, and
such application states that the applicants desire to communicate with other
Holders of Securities of a particular series (in which case the applicants
must all hold Securities of such series) or with Holders of all Securities
with respect to their rights under this Indenture or under such Securities and
such application is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt of such application, at its
election, either
(i) afford to such applicants access to the information
preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2, or
(ii) inform such applicants as to the approximate number of
Holders of Securities of such series or of all Securities, as the
case may be, whose names and addresses appear in the information
preserved at the time by the Trustee, in accordance with the
provisions of subsection (a) of this Section 4.2, and as to the
approximate cost of mailing to such Securityholders the form of
proxy or other communication, if any, specified in such application.
If the Trustee shall elect not to afford to such applicants access
to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of such series or all Holders of
Securities, as the case may be, whose name and address appears in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2 a copy of the form of proxy
or other communication which is specified in such request, with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the Holders
of Securities of such series or of all Securities, as the case may be, or
would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter
an order refusing to sustain any of such objections or if, after the entry of
an order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all the objections so sustained
have been met, and shall enter an order so declaring, the Trustee shall mail
copies of such material to all such Securityholders with reasonable promptness
after the entry of such order and the renewal of such tender; otherwise the
Trustee shall be relieved of any obligation or duty to such applicants
respecting their application.
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(c) Each and every Holder of Securities, by receiving and holding
the same, agrees with the Issuer, Hovnanian and the Trustee that neither the
Issuer nor Hovnanian nor the Trustee nor any agent of the Issuer or Hovnanian
or the Trustee shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders of Securities in
accordance with the provisions of subsection (b) of this Section 4.2,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under such subsection (b).
SECTION 4.3. Reports by the Issuer and Hovnanian. The Issuer and
Hovnanian covenant:
(a) to file with the Trustee, within 15 days after the Issuer or
Hovnanian, as the case may be, is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe), if any,
which the Issuer or Hovnanian, as the case may be, may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act; or, if the Issuer is not required to file information, documents or
reports pursuant to either of such Sections, then to file with the Trustee and
the Commission, in accordance with rules and regulations prescribed from time
to time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a debt security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;
(b) to file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Issuer or Hovnanian, as the case may be, with the conditions and covenants
provided for in this Indenture as may be required from time to time by such
rules and regulations;
(c) to transmit by mail to the Holders of Securities within 30 days
after the filing thereof with the Trustee, in the manner and to the extent
provided in Section 4.4(c), such summaries of any information, documents and
reports required to be filed by the Issuer or Hovnanian, as the case may be,
pursuant to subsections (a) and (b) of this Section 4.3 as may be required to
be transmitted to such Holders by rules and regulations prescribed from time
to time by the Commission; and
(d) furnish to the Trustee, not less than annually, a brief
certificate from the principal executive officer, principal financial officer
or principal accounting officer as to his knowledge of the Issuer's or
Hovnanian's, as the case may be, compliance with all conditions and covenants
under this Indenture. For purposes of this subsection (d), such compliance
shall be determined without regard to any period of grace or requirement of
notice provided under this Indenture.
SECTION 4.4. Reports by the Trustee. (a) The Trustee shall transmit
to Holders such reports concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust Indenture Act of 1939 at
the times and in the manner provided pursuant thereto. To the extent that any
such report is required by the Trust Indenture Act of 1939 with respect to any
12 month period, such report shall cover the 12 month period ending July 15
and shall be transmitted by the next succeeding September 15.(a)
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be furnished to the Issuer and Hovnanian and
be filed by the Trustee with each stock exchange upon which the Securities of
any applicable series are listed and also with the Commission. The Issuer and
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Hovnanian agree to promptly notify the Trustee with respect to any series when
and as the Securities of such series become admitted to trading on any
national securities exchange.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITY HOLDERS
ON EVENT OF DEFAULT
SECTION 5.1. Events of Default. "Event of Default", wherever used
herein with respect to Securities of any series, means any one or more of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Thirteen or otherwise),
unless it is either inapplicable to a particular series or it is specifically
deleted or modified in or pursuant to the Board Resolution or supplemental
indenture establishing such series of Securities or in the form of Security,
for such series:
(a) default in the payment of the principal of or premium, if any,
of the Securities of such series as and when the same shall become due and
payable either at maturity, upon redemption, by declaration or otherwise; or
(b) default in the payment of any installment of interest on any of
the Securities of such series as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; or
(c) default in the payment or satisfaction of any sinking fund or
other purchase obligation with respect to Securities of such series, as and
when such obligation shall become due and payable; or
(d) failure on the part of the Issuer or a Guarantor duly to observe
or perform any other of the covenants or agreements on the part of the Issuer
in the Securities of such series or in, or a Guarantor of, this Indenture
continued for a period of 90 days after the date on which written notice of
such failure, requiring the Issuer or a Guarantor to remedy the same, shall
have been given by certified or registered mail to the Issuer or a Guarantor
by the Trustee, or to the Issuer and the Trustee by the Holders of at least
25% in aggregate principal amount of the Securities of such series then
Outstanding; or
(e) without the consent of the Issuer or Hovnanian a court having
jurisdiction shall enter an order for relief with respect to the Issuer or
Hovnanian or any of its Significant Subsidiaries under any applicable
bankruptcy, insolvency or other similar law of the United States of America,
any state thereof or the District of Columbia, or without the consent of the
Issuer or Hovnanian a court having jurisdiction shall enter a judgment, order
or decree adjudging the Issuer or Hovnanian or any of its Significant
Subsidiaries bankrupt or insolvent, or enter an order for relief for
reorganization, arrangement, adjustment or composition of or in respect of the
Issuer or Hovnanian or any of its Significant Subsidiaries under any
applicable bankruptcy, insolvency or other similar law of the United States of
America, any state thereof or the District of Columbia, and the continuance of
any such judgment, order or decree is unstayed and in effect for a period of
60 consecutive days; or
(f) the Issuer or Hovnanian or any of its Significant Subsidiaries
shall institute proceedings for entry of an order for relief with respect to
the Issuer or Hovnanian or any of its Significant Subsidiaries under any
applicable bankruptcy, insolvency or other similar law of the United States of
America, any state thereof or the District of Columbia or for an adjudication
of insolvency, or shall consent to the institution of bankruptcy or insolvency
proceedings against it, or shall file a petition seeking, or seek or consent
to reorganization, arrangement, composition or relief under any applicable
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bankruptcy, insolvency or other similar law of the United States of America,
any state thereof or the District of Columbia, or shall consent to the filing
of such petition or to the appointment of a receiver, custodian, liquidator,
assignee, trustee, sequestrator or similar official of the Issuer or Hovnanian
or of substantially all of its property, or the Issuer or Hovnanian or any of
its Significant Subsidiaries shall make a general assignment for the benefit
of creditors as recognized under any applicable bankruptcy, insolvency or
other similar law of the United States of America, any state thereof or the
District of Columbia; or
(g) any other Event of Default provided with respect to, or a
Guarantor of, the Securities of such series.
(h) a Guarantee ceases to be in full force and effect (other than in
accordance with the terms of any Guarantee) or a Guarantor denies or
disaffirms its obligations under the Guarantee; or
If an Event of Default with respect to Securities of any series then
Outstanding occurs and is continuing, then and in each and every such case,
unless the principal of all of the Securities of such series shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Securities of such series then
Outstanding, by notice in writing to the Issuer (and to the Trustee if given
by Securityholders), may declare the principal (or, if the Securities of such
series are Original Issue Discount Securities, such portion of the principal
amount as may be specified in the terms of such series) of all the Securities
of such series and the interest, if any, accrued thereon to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, notwithstanding anything to the contrary
contained in this Indenture or in the Securities of such series. This
provision, however, is subject to the condition that, if at any time after the
unpaid principal amount (or such specified amount) of the Securities of such
series shall have been so declared due and payable and before any judgment or
decree for the payment of the moneys due shall have been obtained or entered
as hereinafter provided, the Issuer shall pay or shall deposit with the
Trustee a sum sufficient to pay all matured installments of interest, if any,
upon all of the Securities of such series and the principal of any and all
Securities of such series which shall have become due otherwise than by
acceleration (with interest on overdue installments of interest, if any, to
the extent that payment of such interest is enforceable under applicable law
and on such principal at the rate borne by the Securities of such series to
the date of such payment or deposit) and the reasonable compensation,
disbursements, expenses and advances of the Trustee and all other amounts due
the Trustee under Section 6.6, and any and all defaults under this Indenture,
other than the nonpayment of such portion of the principal amount of and
accrued interest, if any, on Securities of such series which shall have become
due by acceleration, shall have been cured or shall have been waived in
accordance with Section 5.7 or provision deemed by the Trustee to be adequate
shall have been made therefor, then and in every such case the Holders of a
majority in aggregate principal amount of the Securities of such series then
Outstanding, by written notice to the Issuer and to the Trustee, may rescind
and annul such declaration and its consequences; but no such rescission and
annulment shall extend to or shall affect any subsequent default, or shall
impair any right consequent thereon. Notwithstanding the previous sentence, no
waiver shall be effective against any Holder for any Event of Default or event
which with notice or lapse of time or both would be an Event of Default with
respect to any covenant or provision which cannot be modified or amended
without the consent of the Holder of each outstanding Security affected
thereby, unless all such affected Holders agree, in writing, to waive such
Event of Default or other event.
If any Event of Default with respect to the Issuer specified in
Section 5.1(e) or 5.1(f) occurs, all unpaid principal amount (or, if the
Securities of any series then Outstanding are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of each such series) and accrued interest on all Securities of each
series then Outstanding shall ipso facto become and
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be immediately due and payable without any declaration or other act by the
Trustee or any Securityholder.
If the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Issuer, the Trustee and the Securityholders shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Issuer, the Trustee and the Securityholders shall continue as
though no such proceeding had been taken.
Except with respect to an Event of Default pursuant to Section 5.1
(a), (b) or (c), the Trustee shall not be charged with knowledge of any Event
of Default unless written notice thereof shall have been given to a
Responsible Officer by the Issuer, a paying agent or any Securityholder.
SECTION 5.2. Payment of Securities on Default; Suit Therefor. The
Issuer covenants that (a) if default shall be made in the payment of any
installment of interest upon any of the Securities of any series then
Outstanding as and when the same shall become due and payable, and such
default shall have continued for a period of 30 days, or (b) if default shall
be made in the payment of the principal of any of the Securities of such
series as and when the same shall have become due and payable, whether at
maturity of the Securities of such series or upon redemption or by declaration
or otherwise, then, upon demand of the Trustee, the Issuer will pay to the
Trustee, for the benefit of the Holders of the Securities, the whole amount
that then shall have become due and payable on all such Securities of such
series for principal or interest, if any, or both, as the case may be, with
interest upon the overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) upon the overdue installments of
interest, if any, at the rate borne by the Securities of such series; and, in
addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including a reasonable compensation to the
Trustee, its agents, attorneys and counsel, and any expenses or liabilities
incurred by the Trustee hereunder other than through its negligence or bad
faith.
If the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any
such judgment or final decree against the Issuer or any other obligor on the
Securities of such series and collect in the manner provided by law out of the
property of the Issuer or any other obligor on the Securities of such series,
wherever situated, the moneys adjudged or decreed to be payable.
If there shall be pending proceedings for the bankruptcy or for the
reorganization of the Issuer or any other obligor on the Securities of any
series then Outstanding under any bankruptcy, insolvency or other similar law
now or hereafter in effect, or if a receiver or trustee or similar official
shall have been appointed for the property of the Issuer or such other
obligor, or in the case of any other similar judicial proceedings relative to
the Issuer or other obligor upon the Securities of such series, or to the
creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of the Securities of such series shall
then be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand pursuant to
the provisions of this Section 5.2, shall be entitled and empowered by
intervention in such proceedings or otherwise to file and prove a claim or
claims for the whole amount of principal and interest, if any, owing and
unpaid in respect of the Securities of such series, and, in case of any
judicial proceedings, to 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 and of the Securityholders allowed in such judicial proceedings
relative to the Issuer or any other obligor on the Securities of such series,
its or their creditors, or its or their property, and to
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collect and receive any moneys or other property payable or deliverable on any
such claims, and to distribute the same after the deduction of its charges and
expenses, and any receiver, assignee or trustee or similar official in
bankruptcy or reorganization is hereby authorized by each of the
Securityholders to make such payments to the Trustee, and, if the Trustee
shall consent to the making of such payments directly to the Securityholders,
to pay to the Trustee any amount due it for compensation and expenses or
otherwise pursuant to Section 6.6, including counsel fees and expenses
incurred by it up to the date of such distribution. To the extent that such
payment of reasonable compensation, expenses and counsel fees and expenses out
of the estate in any such proceedings shall be denied for any reason, payment
of the same shall be secured by a lien on, and shall be paid out of, any and
all distributions, dividends, moneys, securities and other property which the
Holders of the Securities of such series may be entitled to receive in such
proceedings, whether in liquidation or under any plan of reorganization or
arrangement or otherwise.
All rights of action and of asserting claims under this Indenture,
or under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall be for the ratable benefit of the
Holders of the Securities of the series in respect of which such judgment has
been recovered.
SECTION 5.3. Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee pursuant to Section 5.2 with respect to Securities of
any series then Outstanding shall be applied in the order following, at the
date or dates fixed by the Trustee for the distribution of such moneys, upon
presentation of the several Securities of such series, and stamping thereon
the payment, if only partially paid, and upon surrender thereof, if fully
paid:
FIRST: To the payment of costs and expenses of collection and
reasonable compensation to the Trustee, its agents, attorneys and
counsel, and of all other expenses and liabilities incurred, and all
advances made, by the Trustee pursuant to Section 6.6 except as a result
of its negligence or bad faith;
SECOND: If the principal of the Outstanding Securities of such
series shall not have become due and be unpaid, to the payment of
interest, if any, on the Securities of such series, in the order of the
maturity of the installments of such interest, if any, with interest (to
the extent that such interest has been collected by the Trustee) upon the
overdue installments of interest, if any, at the rate borne by the
Securities of such series, such payment to be made ratably to the Persons
entitled thereto;
THIRD: If the principal of the Outstanding Securities of such series
shall have become due, by declaration or otherwise, to the payment of the
whole amount then owing and unpaid upon the Securities of such series for
principal and interest, if any, with interest on the overdue principal
and (to the extent that such interest has been collected by the Trustee)
upon overdue installments of interest, if any, at the rate borne by the
Securities of such series; and in case such moneys shall be insufficient
to pay in full the whole amounts so due and unpaid upon the Securities of
such series, then to the payment of such principal and interest, if any,
without preference or priority of principal over interest or of interest
over principal, or of any installment of interest over any other
installment of interest, or of any Security over any other Security,
ratably to the aggregate of such principal and accrued and unpaid
interest; and
FOURTH: To the payment of any surplus then remaining to the Issuer,
its successors or assigns, or to whomsoever may be lawfully entitled to
receive the same.
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No claim for interest which in any manner at or after maturity shall
have been transferred or pledged separate or apart from the Securities to
which it relates, or which in any manner shall have been kept alive after
maturity by an extension (otherwise than pursuant to an extension made
pursuant to a plan proposed by the Issuer to the Holders of all Securities of
any series then Outstanding), purchase, funding or otherwise by or on behalf
or with the consent or approval of the Issuer shall be entitled, in case of a
default hereunder, to any benefit of this Indenture, except after prior
payment in full of the principal of all Securities of any series then
Outstanding and of all claims for interest not so transferred, pledged, kept
alive, extended, purchased or funded.
SECTION 5.4. Proceedings by Securityholders. No Holder of any
Securities of any series then Outstanding shall have any right by virtue of or
by availing of any provision of this Indenture to institute any suit, action
or proceeding in equity or at law upon or under or with respect to this
Indenture or for the appointment of a receiver or trustee or similar official,
or for any other remedy hereunder, unless such Holder previously shall have
given to the Trustee written notice of default and of the continuance thereof,
as hereinbefore provided, and unless the Holders of not less than 25% in
aggregate principal amount of the Securities of such series then Outstanding
shall have made written request to the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee
for 60 days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding, it being understood and intended, and being expressly covenanted
by the Holder of every Security of such series with every other Holder and the
Trustee, that no one or more Holders of Securities of such series shall have
any right in any manner whatever by virtue of or by availing of any provision
of this Indenture or of the Securities to affect, disturb or prejudice the
rights of any other Holder of such Securities of such series, or to obtain or
seek to obtain priority over or preference as to any other such Holder, or to
enforce any right under this Indenture or the Securities, except in the manner
herein provided and for the equal, ratable and common benefit of all Holders
of Securities of such series.
Notwithstanding any other provisions in this Indenture, but subject
to Article Thirteen, the right of any Holder of any Security to receive
payment of the principal of, premium, if any, and interest, if any, on such
Security, on or after the respective due dates expressed in such Security, or
to institute suit for the enforcement of any such payment on or after such
respective dates shall not be impaired or affected without the consent of such
Holder.
SECTION 5.5. Proceedings by Trustee. In case of an Event of Default
hereunder, the Trustee may in its discretion proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any of such rights, either by suit in equity or by action at law or by
proceedings in bankruptcy or otherwise, whether for the specific enforcement
of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other legal
or equitable right vested in the Trustee by this Indenture or by law.
SECTION 5.6. Remedies Cumulative and Continuing. All powers and
remedies given by this Article Five to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive
of any thereof or of any other powers and remedies available to the Trustee or
the Securityholders, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture, and no delay or omission of the Trustee or of any Securityholder to
exercise any right or power accruing upon any default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be
a waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 5.4, every power and
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remedy given by this Article Five or by law to the Trustee or to the
Securityholders may be exercised from time to time, and as often as shall be
deemed expedient, by the Trustee or by the Securityholders.
SECTION 5.7. Direction of Proceedings; Waiver of Defaults by
Majority of Securityholders. The Holders of a majority in aggregate principal
amount of the Securities of any series then Outstanding shall have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to Securities of such series; provided, however, that
(subject to the provisions of Section 6.1) the Trustee shall have the right to
decline to follow any such direction if the Trustee shall determine upon
advice of counsel that the action or proceeding so directed may not lawfully
be taken or if the Trustee in good faith by its board of directors, its
executive committee, or a trust committee of directors or Responsible Officers
or both shall determine that the action or proceeding so directed would
involve the Trustee in personal liability. The Holders of a majority in
aggregate principal amount of the Securities of any series then Outstanding
may on behalf of the Holders of all of the Securities of such series waive any
past default or Event of Default hereunder and its consequences except a
default in the payment of interest, if any, on, or the principal of, the
Securities of such series. Upon any such waiver the Issuer, the Trustee and
the Holders of the Securities of such series shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon. Whenever any default or Event of Default hereunder shall
have been waived as permitted by this Section 5.7, said default or Event of
Default shall for all purposes of the Securities and this Indenture be deemed
to have been cured and to be not continuing.
SECTION 5.8. Notice of Defaults. The Trustee shall, within 30 days
after the occurrence of a default, with respect to Securities of any series
then Outstanding, mail to all Holders of Securities of such series, as the
names and the addresses of such Holders appear upon the Securities register,
notice of all defaults known to the Trustee with respect to such series,
unless such defaults shall have been cured before the giving of such notice
(the term "defaults" for the purpose of this Section 5.8 being hereby defined
to be the events specified in clauses (a), (b), (c), (d), (e), (f), (g) and
(h) of Section 5.1, not including periods of grace, if any, provided for
therein and irrespective of the giving of the written notice specified in said
clause (d) but in the case of any default of the character specified in said
clause (d) no such notice to Securityholders shall be given until at least 60
days after the giving of written notice thereof to the Issuer pursuant to said
clause (d)); provided, however, that, except in the case of default in the
payment of the principal of or interest, if any, on any of the Securities, or
in the payment or satisfaction of any sinking fund or other purchase
obligation, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee, or a trust
committee of directors or Responsible Officers or both, of the Trustee in good
faith determines that the withholding of such notice is in the best interests
of the Securityholders.
SECTION 5.9. Undertaking to Pay Costs. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the
cost of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 5.9 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Securityholder, or group of Securityholders, holding in the
aggregate more than 10% in principal amount of the Securities of any series
then Outstanding, or to any suit instituted by any Securityholders for the
enforcement of the payment of the principal of or interest, if any, on any
Security against the Issuer on or after the due date expressed in such
Security.
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ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1. Duties and Responsibilities of the Trustee; During
Default; Prior to Default. In case an Event of Default with respect to the
Securities of a series has occurred (which has not been cured or waived) the
Trustee shall exercise with respect to such series of Securities 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 man would exercise or use under
the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with respect to
the Securities of any series and after the curing or waiving of all such
Events of Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect to
the Securities of any series shall be determined solely by the
express provisions of this Indenture, and the Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case of
any such statements, certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Holders pursuant to Section 5.7 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that
the repayment of such funds or adequate indemnity against such liability is
not reasonably assured to it.
SECTION 6.2. Certain Rights of the Trustee. Subject to Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
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(b) any request, direction, order or demand of the Issuer mentioned
herein shall be sufficiently evidenced by an Officers' Certificate or Issuer
Order (unless other evidence in respect thereof be herein specifically
prescribed); and any resolution of the Board of Directors may be evidenced to
the Trustee by a Board Resolution;
(c) the Trustee may consult with counsel of its selection and any
advice of such counsel promptly confirmed in writing shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted to be taken by it hereunder in good faith and in reliance thereon
in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of this
Indenture (including, without limitation, pursuant to Section 5.7), unless
such Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred
therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing so to do by
the Holders of not less than a majority in aggregate principal amount of the
Securities of all series affected then Outstanding; provided that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such expenses or liabilities as a
condition to proceeding; the reasonable expenses of every such investigation
shall be paid by the Issuer or, if paid by the Trustee or any predecessor
Trustee, shall be repaid by the Issuer upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder;
(h) The Trustee shall not be charged with knowledge of any default
or Event of Default with respect to a series of Securities unless either (i) a
Responsible Officer of the Trustee assigned to the Corporate Trust Office of
the Trustee (or any successor division or department of the Trustee) shall
have actual knowledge of such default or Event of Default or (ii) written
notice of such default or Event of Default shall have been given to the
Trustee by the Issuer or any other obligor on such series of Securities or by
any Holder of Securities of such series; and
(i) The Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture.
SECTION 6.3. Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein
and in the Securities, except the Trustee's
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certificates of authentication, shall be taken as the statements of the
Issuer, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representation as to the validity or sufficiency of
this Indenture, of the Securities or of any prospectus used to sell the
Securities. The Trustee shall not be accountable for the use or application by
the Issuer of any of the Securities or of the proceeds thereof.
SECTION 6.4. Trustee and Agents May Hold Securities; Collections,
etc. The Trustee or any agent of the Issuer or the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee or such agent and,
subject to Sections 6.8 and 6.13, may otherwise deal with the Issuer and
receive, collect, hold and retain collections from the Issuer with the same
rights it would have if it were not the Trustee or such agent.
SECTION 6.5. Moneys Held by Trustee. Subject to the provisions of
Section 10.4 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the
extent required by mandatory provisions of law. Neither the Trustee nor any
agent of the Issuer or the Trustee shall be under any liability for interest
on any moneys received by it hereunder.
SECTION 6.6. Compensation and Indemnification of Trustee and Its
Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such compensation as shall be
agreed to in writing between the Issuer and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust) and the Issuer covenants and agrees to pay or reimburse the
Trustee and each predecessor Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by or on behalf of it in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad
faith. The Issuer also covenants to indemnify the Trustee and each predecessor
Trustee for, and to hold it harmless against, any and all loss, liability,
damage, claim or expense, including taxes (other than taxes based on the
income of the Trustee), incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and its duties hereunder, including the
costs and expenses of defending itself against or investigating any claim or
liability in the premises. The obligations of the Issuer under this Section
6.6 to compensate and indemnify the Trustee and each predecessor Trustee and
to pay or reimburse the Trustee and each predecessor Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Trustee and shall not be subordinate to the
payment of Senior Indebtedness pursuant to Article Thirteen. Such additional
indebtedness shall be a senior claim to that of the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of particular Securities. When the
Trustee incurs expenses or renders services in connection with an Event of
Default specified in Section 5.1 or in connection with Article Five hereof,
the expenses (including the reasonable fees and expenses of its counsel) and
the compensation for the service in connection therewith are intended to
constitute expenses of administration under any bankruptcy law. The provisions
of this Section 6.6 shall survive the resignation or removal of the Trustee
and the termination of this Indenture.
SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc.
Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts
of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively
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proved and established by an Officers' Certificate delivered to the Trustee,
and such certificate, in the absence of negligence or bad faith on the part of
the Trustee, shall be full warrant to the Trustee for any action taken,
suffered or omitted by it under the provisions of this Indenture upon the
faith thereof.
SECTION 6.8. Qualification of Trustee; Conflicting Interests. This
Indenture shall always have a Trustee who satisfies the requirements of
Section 310(a)(1) of the Trust Indenture Act of 1939. The Trustee shall have a
combined capital and surplus of at least $25,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with
Section 310(b) of the Trust Indenture Act of 1939 regarding disqualification
of a trustee upon acquiring a conflicting interest.
SECTION 6.9. Persons Eligible for Appointment as Trustee; Different
Trustees for Different Series. The Trustee for each series of Securities
hereunder shall at all times be a corporation organized and doing business
under the laws of the United States of America or of any state or the District
of Columbia having a combined capital and surplus of at least $25,000,000, and
which is authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal, state or District of
Columbia authority, or a corporation or other Person permitted to act as
trustee by the Commission. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. No obligor upon the Securities or any Affiliate of
such obligor shall serve as trustee upon the Securities. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section 6.9, the Trustee shall resign immediately in the manner and with
the effect specified in Section 6.10.
A different Trustee may be appointed by the Issuer for any series of
Securities prior to the issuance of such Securities. If the initial Trustee
for any series of Securities is to be a trustee other than First Union
National Bank, the Issuer and such Trustee shall, prior to the issuance of
such Securities, execute and deliver an indenture supplemental hereto, which
shall provide for the appointment of such Trustee as Trustee for the
Securities of such series and shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustee.
SECTION 6.10. Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign with respect to one or more or all series of Securities by
giving written notice of resignation to the Issuer. Upon receiving such notice
of resignation, the Issuer shall promptly appoint a successor trustee or
trustees with respect to the applicable series by written instrument in
duplicate, executed by authority of the Board of Directors, one copy of which
instrument shall be delivered to the resigning trustee and one copy to the
successor trustee or trustees. If no successor trustee shall have been so
appointed with respect to any series and have accepted appointment within 30
days after the mailing of such notice of resignation, the resigning trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee, or any Securityholder who has been a bona fide Holder of a
Security or Securities of the applicable series for at least six months may,
subject to the provisions of Section 5.9, on behalf of himself and all others
similarly situated, petition any such court for the appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
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(i) the Trustee shall fail to comply with the provisions of
Section 6.8 with respect to any series of Securities after written
request therefor by the Issuer or by any Securityholder who has been
a bona fide Holder of a Security or Securities of such series for at
least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.9 and shall fail to resign after written
request therefor by the Issuer or by any such Securityholder; or
(iii) the Trustee shall become incapable of acting with respect
to any series of Securities, or shall be adjudged a bankrupt or
insolvent, or a receiver or liquidator of the Trustee or of its
property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;
then, in any such case, the Issuer may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such
series by written instrument, in duplicate, executed by order of the Board of
Directors one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or, subject to the provisions
of Article Five, any Securityholder who has been a bona fide Holder of a
Security or Securities of such series for at least six months may on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
trustee with respect to such series. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the
Securities of each series then Outstanding may at any time remove the Trustee
with respect to Securities of such series and appoint a successor trustee with
respect to the Securities of such series by delivering to the Trustee so
removed, to the successor trustee so appointed and to the Issuer the evidence
provided for in Section 7.1 of the action in that regard taken by the
Securityholders. If no successor trustee shall have been so appointed with
respect to any series and have accepted appointment within 30 days after the
delivery of such evidence of removal, the Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or any
Securityholder who has been a bona fide Holder of a Security or Securities of
the applicable series for at least six months may, subject to the provisions
of Article Five, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(d) Any resignation or removal of the Trustee with respect to any
series and any appointment of a successor trustee with respect to such series
pursuant to any of the provisions of this Section 6.10 shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
6.11.
SECTION 6.11. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and
obligations with respect to such series of its predecessor hereunder, with
like effect as if originally named as trustee for such series hereunder; but,
nevertheless, on the written request of the Issuer or of the successor
trustee, upon payment of its charges then unpaid, the trustee ceasing to act
shall,
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subject to Section 10.4, pay over to the successor trustee all moneys at the
time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Issuer shall
execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.6.
If a successor trustee is appointed with respect to the Securities
of one or more (but not all) series, the Issuer, the predecessor Trustee and
each successor trustee with respect to the Securities of any applicable series
shall execute and deliver an indenture supplemental hereto which shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the predecessor Trustee with respect
to the Securities of any series as to which the predecessor Trustee is not
retiring shall continue to be vested in the predecessor Trustee, and shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such trustees co-trustees of the same
trust and that each such trustee shall be trustee of a trust or trusts under
separate indentures.
No successor trustee with respect to any series of Securities shall
accept appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor trustee shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9.
Upon acceptance of appointment by any successor trustee as provided
in this Section 6.11, the Issuer shall give notice thereof to the Holders of
Securities of each series affected, by mailing such notice to such Holders at
their addresses as they shall appear on the registry books. If the Issuer
fails to give such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
given at the expense of the Issuer.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee (including the trust created by this
Indenture), shall be the successor of the Trustee hereunder, provided that
such corporation shall be qualified under the provisions of Section 6.8 and
eligible under the provisions of Section 6.9, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any of the Securities of any series shall
have been authenticated but not delivered, any such successor to the Trustee
may adopt the certificate of authentication of any predecessor Trustee and
deliver such Securities so authenticated; and, in case at that time any of the
Securities of any series shall not have been authenticated, any successor to
the Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor Trustee; and in all such
cases such certificate shall have the full force which it is anywhere in the
Securities of such series or in this Indenture provided that the certificate
of the Trustee shall have; provided, that the right to adopt the certificate
of authentication of any predecessor Trustee or to authenticate Securities of
any series in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
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SECTION 6.13. Preferential Collection of Claims Against the Issuer.
The Trustee shall comply with Section 311(a) of the Trust Indenture Act of
1939, excluding any creditor relationship listed in Section 311(b) of the
Trust Indenture Act of 1939. A Trustee who has resigned or been removed shall
be subject to Section 311(a) of the Trust Indenture Act of 1939 to the extent
indicated therein.
SECTION 6.14. Appointment of Authenticating Agent. As long as any
Securities of a series remain Outstanding, the Trustee may, by an instrument
in writing, appoint with the approval of the Issuer an authenticating agent
(the "Authenticating Agent") which shall be authorized to act on behalf of the
Trustee to authenticate Securities, including Securities issued upon exchange,
registration of transfer, partial redemption or pursuant to Section 2.9.
Securities of each such series authenticated by such Authenticating Agent
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee. Whenever
reference is made in this Indenture to the authentication and delivery of
Securities of any series by the Trustee or to the Trustee's Certificate of
Authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent for such series
and a Certificate of Authentication executed on behalf of the Trustee by such
Authenticating Agent. Such Authenticating Agent shall at all times be a
corporation organized and doing business under the laws of the United States
of America or of any state or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $25,000,000 (determined as provided in Section 6.9 with respect to
the Trustee) and subject to supervision or examination by federal or state
authority.
Any corporation into which any Authenticating Agent may be merged or
converted, or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency
business (including the authenticating agency contemplated by this Indenture)
of any Authenticating Agent, shall continue to be the Authenticating Agent
with respect to all series of Securities for which it served as Authenticating
Agent without the execution or filing of any paper or any further act on the
part of the Trustee or such Authenticating Agent. Any Authenticating Agent may
at any time, and if it shall cease to be eligible shall, resign by giving
written notice of resignation to the Trustee and to the Issuer. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to the Issuer.
Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 6.14 with respect
to one or more series of Securities, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Issuer and the Issuer
shall provide notice of such appointment to all Holders of Securities of such
series in the manner and to the extent provided in Section 11.4. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as Authenticating Agent.
The Issuer agrees to pay to the Authenticating Agent for such series from time
to time reasonable compensation. The Authenticating Agent for the Securities
of any series shall have no responsibility or liability for any action taken
by it as such at the direction of the Trustee.
Sections 6.2, 6.3, 6.4 and 7.3 shall be applicable to any
Authenticating Agent.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1. Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or
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taken by a specified percentage in principal amount of the Securityholders of
any or all series may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such specified percentage of
Securityholders in person or by agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective
when such instrument or instruments are delivered to the Trustee. Proof of
execution of any instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to Sections 6.1 and
6.2) conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Article Seven.
SECTION 7.2. Proof of Execution of Instruments and of Holding of
Securities. Subject to Sections 6.1 and 6.2, the execution of any instrument
by a Securityholder or his agent or proxy may be proved in the following
manner:
(a) The fact and date of the execution by any Holder of any
instrument may be proved by the certificate of any notary public or other
officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the person executing such instruments acknowledged to
him the execution thereof, or by an affidavit of a witness to such execution
sworn to before any such notary or other such officer. Where such execution is
by or on behalf of any legal entity other than an individual, such certificate
or affidavit shall also constitute sufficient proof of the authority of the
person executing the same.
(b) The ownership of Securities shall be proved by the Security
register or by a certificate of the Security registrar.
SECTION 7.3. Holders to be Treated as Owners. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the
Person in whose name any Security shall be registered upon the Security
register for such series as the absolute owner of such Security (whether or
not such Security shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of and, subject to the provisions of this
Indenture, interest, if any, on such Security and for all other purposes; and
neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee
shall be affected by any notice to the contrary.
SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Outstanding Securities of any or all series have concurred in any direction,
consent or waiver under this Indenture, Securities which are owned by the
Issuer or by any other obligor on the Securities with respect to which such
determination is being made or by any Affiliate of the Issuer or any other
obligor on the Securities with respect to which such determination is being
made shall be disregarded and deemed not to be Outstanding for the purpose of
any such determination, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver
only Securities which a Responsible Officer of the Trustee knows are so owned
shall be so disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Issuer or any other obligor upon
the Securities or any Affiliate of the Issuer or any other obligor on the
Securities. In case of a dispute as to such right, the advice of counsel shall
be full protection in respect of any decision made by the Trustee in
accordance with such advice. Upon request of the Trustee, the Issuer shall
furnish to the Trustee promptly an Officers' Certificate listing and
identifying all Securities, if any, known by the Issuer to be owned or held by
or for the account of any of the above-described Persons; and, subject to
Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Securities not listed therein are Outstanding for the purpose of
any such determination.
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SECTION 7.5. Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Trustee, as provided in Section 7.1,
of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action, any Holder of a
Security the serial number of which is shown by the evidence to be included
among the serial numbers of the Securities the Holders of which have consented
to such action may, by filing written notice at the Corporate Trust Office and
upon proof of holding as provided in this Article Seven, revoke such action so
far as concerns such Security provided that such revocation shall not become
effective until three Business Days after such filing. Except as aforesaid,
any such action taken by the Holder of any Security shall be conclusive and
binding upon such Holder and upon all future Holders and owners of such
Security and of any Securities issued in exchange or substitution therefor or
on registration of transfer thereof, irrespective of whether or not any
notation in regard thereto is made upon any such Security. Any action taken by
the Holders of the percentage in aggregate principal amount of the Securities
of any or all series, as the case may be, specified in this Indenture in
connection with such action shall be conclusively binding upon the Issuer, the
Trustee and the Holders of all the Securities affected by such action.
SECTION 7.6. Record Date for Consents and Waivers. The Issuer may,
but shall not be obligated to, establish a record date for the purpose of
determining the Persons entitled to (i) waive any past default with respect to
the Securities of such series in accordance with Section 5.7 of the Indenture,
(ii) consent to any supplemental indenture in accordance with Section 8.2 of
the Indenture or (iii) waive compliance with any term, condition or provision
of any covenant hereunder. If a record date is fixed, the Holders on such
record date, or their duly designated proxies, and any such Persons, shall be
entitled to waive any such past default, consent to any such supplemental
indenture or waive compliance with any such term, condition or provision,
whether or not such Holder remains a Holder after such record date; provided,
however, that unless such waiver or consent is obtained from the Holders, or
duly designated proxies, of the requisite principal amount of Outstanding
Securities of such series prior to the date which is the 120th day after such
record date, any such waiver or consent previously given shall automatically
and without further action by any Holder be cancelled and of no further
effect.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a Board Resolution (which
resolution may provide general terms or parameters for such action and may
provide that the specific terms of such action may be determined in accordance
with or pursuant to an Issuer Order), and the Trustee may from time to time
and at any time enter into an indenture or indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act of 1939 as
in force at the date of the execution thereof) for one or more of the
following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee
as security for the Securities of one or more series any property or assets;
(b) to evidence the succession of another Person to the Issuer or
Hovnanian, or successive successions, and the assumption by the successor
Person of the covenants, agreements and obligations of the Issuer or Hovnanian
herein and the Securities or the Guarantees;
(c) to add to the covenants of the Issuer or Hovnanian such further
covenants, restrictions, conditions or provisions for the protection of the
Holders of all or any series of Securities (and if such covenants,
restrictions, conditions or provisions are to be for the protection of less
than all
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series of Securities, stating that the same are expressly being included
solely for the protection of such series) or to surrender any right or power
herein conferred upon the Issuer or Hovnanian, and to make the occurrence, or
the occurrence and continuance, of a default in any such additional covenants,
restrictions, conditions or provisions an Event of Default permitting the
enforcement of all or any of the several remedies provided in this Indenture
as herein set forth; provided, however, that in respect of any such additional
covenant, restriction, condition or provision such supplemental indenture may
provide for a particular period of grace after default (which period may be
shorter or longer than that allowed in the case of other defaults) or may
provide for an immediate enforcement upon such an Event of Default or may
limit the remedies available to the Trustee upon such an Event of Default or
may limit the right of the Holders of a majority in aggregate principal amount
of the Securities of such series to waive such an Event of Default;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make any other provisions as the Issuer may deem necessary or
desirable, provided, however, that no such action shall materially adversely
affect the interests of the Holders of the Securities;
(e) to establish the form or terms of Securities or the Guarantees
to be endorsed thereon of any series as permitted by Sections 2.1 and 2.3;
(f) to provide for the issuance of Securities of any series in
coupon form (including Securities registrable as to principal only) and to
provide for exchangeability of such Securities for the Securities issued
hereunder in fully registered form and to make all appropriate changes for
such purpose;
(g) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the Trust Indenture Act of 1939, or under any similar federal
statute hereafter enacted, and to add to this Indenture such other provisions
as may be expressly permitted by the Trust Indenture Act of 1939, excluding,
however, the provisions referred to in Section 316(a)(2) of the Trust
Indenture Act of 1939 as in effect at the date as of which this instrument was
executed or any corresponding provision provided for in any similar federal
statute hereafter enacted; or
(h) to evidence and provide for the acceptance of appointment
hereunder of a Trustee other than First Union National Bank as Trustee for a
series of Securities and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant to
the requirements of Section 6.9 hereof;
(i) subject to Section 8.2 hereof, to add to or modify the
provisions hereof as may be necessary or desirable to provide for the
denomination of Securities in foreign currencies which shall not adversely
affect the interests of the Holders of the Securities in any material respect;
(j) to modify the covenants or Events of Default of the Issuer
solely in respect of, or add new covenants or Events of Default of the Issuer
that apply solely to, Securities not Outstanding on the date of such
supplemental indenture; and
(k) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one or more
series and to add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one trustee, pursuant to the requirements of
Section 6.11.
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The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the
Securities then Outstanding, notwithstanding any of the provisions of Section
8.2.
SECTION 8.2. Supplemental Indentures with Consent of
Securityholders. With the consent (evidenced as provided in Article Seven) of
the Holders of not less than a majority in aggregate principal amount of the
Securities then Outstanding of any series affected by such supplemental
indenture, the Issuer, when authorized by a Board Resolution (which resolution
may provide general terms or parameters for such action and may provide that
the specific terms of such action may be determined in accordance with or
pursuant to an Issuer Order), and the Trustee may, from time to time and at
any time, enter into an indenture or indentures supplemental hereto (which
shall conform to the provisions of the Trust Indenture Act of 1939 as in force
at the date of execution thereof) for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Indenture or of any supplemental indenture or of modifying in any manner the
rights of the Holders of the Securities of such series; provided, that no such
supplemental indenture shall (a) extend the stated final maturity of the
principal of any Security, or reduce the principal amount thereof, or reduce
the rate or extend the time of payment of interest, if any, thereon (or, in
the case of an Original Issue Discount Security, reduce the rate of accretion
of original issue discount thereon), or reduce or alter the method of
computation of any amount payable on redemption, repayment or purchase by the
Issuer thereof (or the time at which any such redemption, repayment or
purchase may be made), or make the principal thereof (including any amount in
respect of original issue discount), or interest, if any, thereon payable in
any coin or currency other than that provided in the Securities or in
accordance with the terms of the Securities, or reduce the amount of the
principal of an Original Issue Discount Security that would be due and payable
upon an acceleration of the maturity thereof or the amount thereof provable in
bankruptcy in each case pursuant to Article Five, or impair or affect the
right of any Securityholder to institute suit for the payment thereof or, if
the Securities provide therefor, any right of repayment or purchase at the
option of the Securityholder, in each case without the consent of the Holder
of each Security so affected, or (b) reduce the aforesaid percentage of
Securities of any series, the consent of the Holders of which is required for
any such supplemental indenture, without the consent of the Holders of each
Security so affected. No consent of any Holder of any Security shall be
necessary under this Section 8.2 to permit the Trustee and the Issuer to
execute supplemental indentures pursuant to Sections 8.1 and 9.2.
A supplemental indenture which changes or eliminates any covenant,
Event of Default or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series of
Securities, or which modifies the rights of Holders of Securities of such
series, with respect to such covenant or provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any
other series.
Upon the request of the Issuer, accompanied by a copy of a
resolution of the Board of Directors (which resolution may provide general
terms or parameters for such action and may provide that the specific terms of
such action may be determined in accordance with or pursuant to an Issuer
Order) certified by the secretary or an assistant secretary of the Issuer
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of the Holders of the
Securities as aforesaid and other documents, if any, required by Section 7.1,
the Trustee shall join with the Issuer in the execution of such supplemental
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indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may at its discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the Securityholders
under this Section 8.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 8.2, the
Issuer (or the Trustee at the request and expense of the Issuer) shall give
notice thereof to the Holders of then Outstanding Securities of each series
affected thereby, as provided in Section 11.4. Any failure of the Issuer to
give such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
SECTION 8.3. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Trustee, the Issuer and the
Holders of Securities of each series affected thereby shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and shall be deemed to be part of the terms
and conditions of this Indenture for any and all purposes.
SECTION 8.4. Documents to Be Given to Trustee. The Trustee, subject
to the provisions of Sections 6.1 and 6.2, shall be entitled to receive an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant to this Article Eight complies
with the applicable provisions of this Indenture and that all conditions
precedent to the execution and delivery of such supplemental indenture have
been satisfied.
SECTION 8.5. Notation on Securities in Respect of Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article Eight may bear a notation in form approved by the Trustee for such
series as to any matter provided for by such supplemental indenture or as to
any action taken by Securityholders. If the Issuer or the Trustee shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Issuer, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by
the Issuer, authenticated by the Trustee and delivered in exchange for the
Securities of such series then Outstanding.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR OTHER DISPOSITION
SECTION 9.1. Consolidation Permitted, etc., on Certain Terms.
Subject to the provisions of Section 9.2, nothing contained in this Indenture
or in any of the Securities shall prevent any consolidation or merger of the
Issuer or Hovnanian with or into any other Person or Persons (whether or not
affiliated with the Issuer), or successive consolidations or mergers in which
the Issuer or Hovnanian or their successor or successors shall be a party or
parties, or shall prevent any sale, lease, exchange or other disposition of
all or substantially all the property and assets of the Issuer or Hovnanian to
any other Person (whether or not affiliated with the Issuer or Hovnanian)
authorized to acquire and operate the same; provided, however, and the Issuer
and Hovnanian hereby covenant and agree, that any such consolidation, merger,
sale, lease, exchange or other disposition shall be upon the conditions that
(a)
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immediately after giving effect to such consolidation, merger, sale, lease,
exchange or other disposition of the Person (whether the Issuer or Hovnanian
or such other Person) formed by or surviving any such consolidation or merger,
or to which such sale, lease, exchange or other disposition shall have been
made, no Event of Default, and no event which after notice or lapse of time or
both, would become an Event of Default, shall have occurred and be continuing;
(b) the Person (if other than the Issuer or Hovnanian) formed by or surviving
any such consolidation or merger, or to which such sale, lease, exchange or
other disposition shall have been made, shall be a corporation or partnership
organized under the laws of the United States of America, any state thereof or
the District of Columbia; and (c) the due and punctual payment of the
principal of and interest, if any, on all the Securities, according to their
tenor, and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed by the Issuer or
Hovnanian, shall be expressly assumed, by supplemental indenture satisfactory
in form to the Trustee executed and delivered to the Trustee, by the Person
(if other than the Issuer or Hovnanian) formed by such consolidation, or into
which the Issuer or Hovnanian shall have been merged, or by the Person which
shall have acquired or leased such property.
SECTION 9.2. Successor Corporation to be Substituted. In case of any
such consolidation or merger or any sale, conveyance or lease of all or
substantially all of the property of the Issuer or Hovnanian and upon the
assumption by the successor Person, by supplemental indenture executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due
and punctual payment of the principal of, premium, if any, and interest, if
any, on all of the Securities and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Issuer
or Hovnanian, such successor Person shall succeed to and be substituted for
the Issuer or Hovnanian, with the same effect as if it had been named herein
as the party of the first part, and the Issuer or Hovnanian (including any
intervening successor to the Issuer or Hovnanian which shall have become the
obligor hereunder) shall be relieved of any further obligation under this
Indenture and the Securities; provided, however, that in the case of a sale,
lease, exchange or other disposition of the property and assets of the Issuer
or Hovnanian (including any such intervening successor), the Issuer or
Hovnanian (including any such intervening successor) shall continue to be
liable on its obligations under this Indenture and the Securities to the
extent, but only to the extent, of liability to pay the principal of, premium,
if any, and interest, if any, on the Securities at the time, places and rate
prescribed in this Indenture and the Securities. Such successor Person
thereupon may cause to be signed, and may issue either in its own name or in
the name of the Issuer or Hovnanian, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Issuer or
Hovnanian and delivered to the Trustee; and, upon the order of such successor
Person instead of the Issuer or Hovnanian and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously shall have been
signed and delivered by the officers of the Issuer or Hovnanian to the Trustee
for authentication, and any Securities which such successor Person thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All
the Securities so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or thereafter
issued in accordance with the terms of this Indenture as though all of such
Securities had been issued at the date of the execution hereof.
In case of any such consolidation or merger or any sale, lease,
exchange or other disposition of all or substantially all of the property and
assets of the Issuer or Hovnanian, such changes in phraseology and form (but
not in substance) may be made in the Securities, thereafter to be issued, as
may be appropriate.
SECTION 9.3. Opinion of Counsel to be Given Trustee. The Trustee,
subject to Sections 6.1 and 6.2, shall receive an Officers' Certificate and
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, lease, exchange or other disposition and any such assumption complies
with the provisions of this Article Nine.
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ARTICLE TEN
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 10.1. Applicability of Article. Unless specified otherwise
pursuant to Section 2.3 for Securities of a series, this Article shall apply
to each series of Securities issued under this Indenture.
SECTION 10.2. Legal Defeasance And Discharge. The Issuer shall,
subject to the satisfaction of the conditions set forth in Section 10.4
hereof, be deemed to have been discharged from its obligations with respect to
all Outstanding Securities on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Issuer shall be deemed to have paid and discharged
the entire Indebtedness represented by the Outstanding Securities, which shall
thereafter be deemed to be Outstanding only for the purposes of Section 10.5
hereof and the other Sections of this Indenture referred to in clauses (a) and
(b) below, and to have satisfied all of its obligations under such Securities
and this Indenture (and the Trustee, on demand of and at the expense of the
Issuer, shall execute proper instruments delivered to it by the Issuer
acknowledging the same), except of the following provisions which shall
survive until otherwise terminated or discharged hereunder; (a) the rights of
Holder of Outstanding Securities to receive payments in respect of the
principal of, premium, if any, and interest on such Securities when such
payments are due from the trust referred to below; (b) the Issuer's
obligations with respect to the Securities concerning mutilated, destroyed,
lost or stolen Securities and the maintenance of an office or agency for
payment and money for security payments held in trust; (c) the rights, powers,
trusts, duties and immunities of the Trustee, and the Issuer's obligations in
connection therewith; and (d) the Legal Defeasance provisions of this
Indenture.
SECTION 10.3. Covenant Defeasance. The Issuer shall, subject to the
satisfaction of the conditions set forth in Section 10.4 hereof, be released
from its obligations under the covenants contained in Articled Nine and to the
extent described in the applicable supplemental indenture, with respect to any
series of Securities, with respect to the Outstanding Securities on and after
the date of the conditions set forth in Section 10.4 are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not Outstanding for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed Outstanding
for all other purposes hereunder (it being understood that such Securities
shall not be deemed outstanding for accounting purposes). For this purpose,
Covenant Defeasance means that, with respect to the Outstanding Securities,
the Issuer may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall
not constitute a default or an Event of Default under Section 5.1 hereof, but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby. Subject to the satisfaction of the conditions set
forth in Section 10.4 hereof, Sections 5.1(e), 5.1(f) and 5.1(g) hereof shall
not constitute Events of Default or defaults hereunder.
SECTION 10.4. Conditions To Legal Or Covenant Defeasance. The
following shall be the conditions to the application of either Section 10.2 or
10.3 hereof to the Outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuer must irrevocably deposit, or cause to be deposited,
with the Trustee, in trust, for the benefit of the Holders of the Securities,
cash in U.S. dollars, U.S. Government Obligations, or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay, without
reinvestment, the principal of, premium, if any,
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and interest on the Outstanding Securities on the stated maturity thereof or
on the applicable redemption date, as the case may be, and the Issuer must
specify whether the Securities are being defeased to maturity or to a
particular redemption date;
(b) in the case of Legal Defeasance, the Issuer must deliver to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming
that the Issuer has received from, or there has been published by, the
Internal Revenue Service a ruling, or there has been a change in the
applicable United States federal income tax law after the date of this
Indenture, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Holders of the Outstanding Securities will
not recognize income, gain or loss for United States federal income tax
purposes as a result of such Legal Defeasance, and will be subject to United
States federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(c) in the case of Covenant Defeasance, the Issuer must deliver to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the Outstanding Securities will not recognize
income, gain or loss for United States federal income tax purposes as a result
of such Covenant Defeasance, and such Holders will be subject to United States
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a default or Event of
Default resulting from the borrowing of funds to be applied to such deposit)
or insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under, any material
agreement or instrument (other than the Indenture) to which the Issuer or any
of its Restricted Subsidiaries is a party or by which the issuer or any of its
Restricted Subsidiaries is bound;
(f) the Issuer must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Issuer with the intent of
preferring the Holders of the Securities over other creditors of the Issuer,
or with the intent of defeating, hindering, delaying or defrauding creditors
of the Issuer or others;
(g) the Issuer must deliver to the Trustee an Officers' Certificate
and an opinion of Counsel in the United States reasonably acceptable to the
Trustee, each stating that the conditions precedent provided for or relating
to Legal Defeasance or Covenant Defeasance, as applicable, in the case of the
Officer's Certificate, in clauses (a) through (f) and, in the case of the
opinion of Counsel, in clauses (b) and (c) of this paragraph, have been
complied with.
SECTION 10.5. Deposited Money And Government Securities To Be Held
In Trust; Other Miscellaneous Provisions. Subject to Section 10.6 hereof, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively, and
solely for purposes of this Section 10.5, the "Trustee") pursuant to Section
10.4 hereof in respect of the outstanding Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Issuer acting as Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
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The Issuer shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable U.S.
Government Obligations deposited pursuant to Section 10.4 hereof or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
Outstanding Securities.
Anything in this Article Ten to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon the request
of the Issuer any money or non-callable U.S. Government Obligations held by it
as provided in Section 10.4 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 10.4(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 10.6. Repayment To Issuer. Any money deposited with the
Trustee or any Paying Agent, or then held by the Issuer, in trust for the
payment of the principal of, premium or interest on any Security and remaining
unclaimed for two years after such principal, and premium, if any, or interest
has become due and payable shall be paid to the Issuer on its request or (if
then held by the Issuer) shall be discharged from such trust; and the Holder
of such Security shall thereafter, as an unsecured creditor, look only to the
Issuer for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Issuer as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at
the expense of the Issuer cause to be published once, in the New York Times
and The Wall Street Journal (national edition), 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 notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer
SECTION 10.7. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or non-callable U.S. Government Obligations in
accordance with Section 10.2 or 10.3 hereof, as the case may be, by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Issuer's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 10.2 or 10.3
hereof until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 10.2 or 10.3 hereof, as the case may
be; provided, however, that, if the Issuer makes any payment of principal of,
premium, if any, or interest on any Security following the reinstatement of
its obligations, the Issuer shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money held by the Trustee
or Paying Agent.
SECTION 10.8. Survival. The Trustee's rights under this Article Ten
shall survive termination of this Indenture.
SECTION 10.9. Satisfaction and Discharge of Indenture. If at any
time (a) the Issuer shall have paid or caused to be paid the principal of,
premium, if any, and interest, if any, on all the Securities Outstanding
(other than Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.9) as and when the same
shall have become due and payable, or (b) the Issuer shall have delivered to
the Trustee for cancellation all Securities theretofore authenticated (other
than Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.9); and if, in any such case, the
Issuer shall also pay or cause to be paid all other sums payable hereunder by
the Issuer (including all amounts, payable to the Trustee pursuant to Section
6.6), then this Indenture shall cease to be of further effect, and the
Trustee, on demand of the Issuer accompanied by an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent relating to
the satisfaction and discharge contemplated by this provision have been
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complied with, and at the cost and expense of the Issuer, shall execute proper
instruments acknowledging such satisfaction and discharging this Indenture.
The Issuer agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred, and to compensate the Trustee for
any services thereafter reasonably and properly rendered, by the Trustee in
connection with this Indenture or the Securities.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1. Partners, Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability. No recourse under or
upon any obligation, covenant or agreement contained in this Indenture, or in
any Security, or because of any indebtedness evidenced thereby, shall be had
against any incorporator, as such or against any past, present or future
stockholder, officer or director, as such, of the Issuer, or any partner of
the Issuer or of any successor, either directly or through the Issuer or any
successor, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of the Securities by the Holders thereof and as part of the
consideration for the issue of the Securities.
SECTION 11.2. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities. Nothing in this Indenture or in the
Securities, expressed or implied, shall give or be construed to give to any
Person, other than the parties hereto and their successors and the Holders of
the Senior Indebtedness and the Holders of the Securities, any legal or
equitable right, remedy or claim under this Indenture or under any covenant or
provision herein contained, all such covenants and provisions being for the
sole benefit of the parties hereto and their successors and of the Holders of
the Securities.
SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Issuer shall bind its successors and assigns,
whether so expressed or not.
SECTION 11.4. Notices and Demands on Issuer, Trustee and Holders of
Securities. Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the Holders
of Securities to or on the Issuer, or as required pursuant to the Trust
Indenture Act of 1939, may be given or served by being deposited postage
prepaid, first-class mail (except as otherwise specifically provided herein)
addressed (until another address of the Issuer is filed by the Issuer with the
Trustee) to K. Hovnanian Enterprises, Inc., 10 Highway 35, P.O. Box 500, Red
Bank, New Jersey 07701. Any notice, direction, request or demand by the Issuer
or any Holder of Securities to or upon the Trustee shall be deemed to have
been sufficiently given or served by being deposited postage prepaid,
first-class mail (except as otherwise specifically provided herein) addressed
(until another address of the Trustee is filed by the Trustee with the Issuer)
to First Union National Bank, 21 South Street, Morristown, New Jersey 07960,
[attention: Corporate Trust Administration (K. Hovnanian Enterprises, Inc.
[specify series of Securities])].
Where this Indenture provides for notice to Holders of Securities,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder entitled thereto, at his last address as it appears in the Security
register. Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
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In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Issuer when such
notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be reasonably satisfactory to
the Trustee shall be deemed to be sufficient notice.
SECTION 11.5. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, or as required pursuant to the Trust Indenture Act of 1939, the
Issuer or Hovnanian, as applicable, shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent have been complied with, except that in the case of any
such application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture (other
than a certificate provided pursuant to Section 4.3(d)) and delivered to the
Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition, (b) 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, (c) 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
opinion as to whether or not such covenant or condition has been complied
with, and (d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters, on information with respect to which
is in the possession of the Issuer or Hovnanian, as applicable, upon the
certificate, statement or opinion of or representations by an officer or
officers of the Issuer or Hovnanian, as applicable, unless such counsel knows
that the certificate, statement or opinion or representations with respect to
the matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or
Hovnanian, as applicable, or of counsel may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of or representations by an
accountant or firm of accountants in the employ of the Issuer or Hovnanian, as
applicable, unless such officer or counsel, as the case may be, knows that the
certificate or opinion or representations with respect to the accounting
matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.
SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays. If
the date of maturity of principal of or interest, if any, on the Securities of
any series or the date fixed for redemption, purchase or repayment of any such
Security shall not be a Business Day, then payment of interest, if any,
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premium, if any, or principal need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made
on the date of maturity or the date fixed for redemption, purchase or
repayment, and, in the case of payment, no interest shall accrue for the
period after such date.
SECTION 11.7. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with another provision included in
this Indenture which is required to be included herein by any of Sections 310
to 317, inclusive, or is deemed applicable to this Indenture by virtue of the
provisions, of the Trust Indenture Act of 1939, such required provision shall
control.
SECTION 11.8. GOVERNING LAW. THIS INDENTURE AND EACH SECURITY SHALL
BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 11.9. Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
SECTION 11.10. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1. Applicability of Article. The provisions of this
Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any sinking fund for the retirement of
Securities of a series except as otherwise specified, as contemplated by
Section 2.3 for Securities of such series.
SECTION 12.2. Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Securities of any series to be redeemed as a
whole or in part at the option of the Issuer shall be given by mailing notice
of such redemption by first class mail, postage prepaid, at least 30 days and
not more than 60 days prior to the date fixed for redemption to such Holders
of Securities of such series at their last addresses as they shall appear in
the Security register. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or
not the Holder receives the notice. Failure to give notice by mail, or any
defect in the notice to the Holder of any Security of a series designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security of such series.
The notice of redemption to each such Holder shall specify (i) the
principal amount of each Security of such series held by such Holder to be
redeemed, (ii) the date fixed for redemption, (iii) the redemption price, (iv)
the place or places of payment, (v) the CUSIP number relating to such
Securities, (vi) that payment will be made upon presentation and surrender of
such Securities, (vii) whether such redemption is pursuant to the mandatory or
optional sinking fund, or both, if such be the case, (viii) whether interest,
if any, (or, in the case of Original Issue Discount Securities,
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original issue discount) accrued to the date fixed for redemption will be paid
as specified in such notice and (ix) whether on and after said date interest,
if any, (or, in the case of Original Issue Discount Securities, original issue
discount) thereon or on the portions thereof to be redeemed will cease to
accrue. In case any Security of a series is to be redeemed in part only, the
notice of redemption shall state the portion of the principal amount thereof
to be redeemed and shall state that on and after the date fixed for
redemption, upon surrender of such Security, a new Security or Securities of
such series in principal amount equal to the unredeemed portion thereof will
be issued.
The notice of redemption of Securities of any series to be redeemed
at the option of the Issuer shall be given by the Issuer or, at the Issuer's
request, by the Trustee in the name and at the expense of the Issuer.
On or before the redemption date specified in the notice of
redemption given as provided in this Section 12.2, the Issuer will deposit
with the Trustee or with one or more paying agents (or, if the Issuer is
acting as its own paying agent, set aside, segregate and hold in trust as
provided in Section 3.5) an amount of money sufficient to redeem on the
redemption date all the Securities of such series so called for redemption at
the appropriate redemption price, together with accrued interest, if any, to
the date fixed for redemption. The Issuer will deliver to the Trustee at least
45 days prior to the date fixed for redemption (unless a shorter notice period
shall be satisfactory to the Trustee) an Officers' Certificate stating the
aggregate principal amount of Securities to be redeemed. In case of a
redemption at the election of the Issuer prior to the expiration of any
restriction on such redemption, the Issuer shall deliver to the Trustee, prior
to the giving of any notice of redemption to Holders pursuant to this Section,
an Officers' Certificate stating that such restriction has been complied with.
If less than all the Securities of a series are to be redeemed, the
Trustee within 10 Business Days after the Issuer gives written notice to the
Trustee that such redemption is to occur, shall select, in such manner as it
shall deem appropriate and fair, Securities of such series to be redeemed.
Notice of the redemption shall be given only after such selection has been
made. Securities may be redeemed in part in multiples equal to the minimum
authorized denomination for Securities of such series or any multiple thereof.
The Trustee shall promptly notify the Issuer in writing of the Securities of
such series selected for redemption and, in the case of any Securities of such
series selected for partial redemption, the principal amount thereof to be
redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities of any
series shall relate, in the case of any Security redeemed or to be redeemed
only in part, to the portion of the principal amount of such Security which
has been or is to be redeemed.
SECTION 12.3. Payment of Securities Called for Redemption. If notice
of redemption has been given as provided by this Article Twelve, the
Securities or portions of Securities specified in such notice shall become due
and payable on the date and at the place or places stated in such notice at
the applicable redemption price, together with interest, if any, accrued to
the date fixed for redemption, and on and after said date (unless the Issuer
shall default in the payment of such Securities at the redemption price,
together with interest, if any, accrued to said date) interest, if any (or, in
the case of Original Issue Discount Securities, original issue discount) on
the Securities or portions of Securities so called for redemption shall cease
to accrue, and such Securities shall cease from and after the date fixed for
redemption (unless an earlier date shall be specified in a Board Resolution,
Officers' Certificate or executed supplemental indenture referred to in
Sections 2.1 and 2.3 by or pursuant to which the form and terms of the
Securities of such series were established) except as provided in Sections 6.5
and 10.4, to be entitled to any benefit or security under this Indenture, and
the Holders thereof shall have no right in respect of such Securities except
the right to receive the redemption price thereof and unpaid interest, if any,
to the date fixed for redemption. On presentation and surrender of such
Securities at a place of payment specified in said notice, said Securities or
the specified portions thereof shall be paid and redeemed by the Issuer at the
applicable redemption price, together with interest, if any, accrued thereon
to the date fixed for redemption; provided that payment of interest, if any,
becoming due on or prior to the
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date fixed for redemption shall be payable to the Holders of Securities
registered as such on the relevant record date subject to the terms and
provisions of Sections 2.3 and 2.7 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the redemption price shall, until paid or
duly provided for, bear interest from the date fixed for redemption at the
rate of interest or Yield to Maturity (in the case of an Original Issue
Discount Security) borne by such Security.
Upon presentation of any Security redeemed in part only, the Issuer
shall execute and the Trustee shall authenticate and deliver to or on the
order of the Holder thereof, at the expense of the Issuer, a new Security or
Securities of such series, and of like tenor, of authorized denominations, in
principal amount equal to the unredeemed portion of the Security so presented.
SECTION 12.4. Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and
certificate number in an Officers' Certificate delivered to the Trustee at
least 45 days prior to the last date on which notice of redemption may be
given as being owned of record and beneficially by, and not pledged or
hypothecated by either (a) the Issuer, or (b) a Person specifically identified
in such written statement as an Affiliate of the Issuer.
SECTION 12.5. Mandatory and Optional Sinking Funds. The minimum
amount of any sinking fund payment provided for by the terms of the Securities
of any series is herein referred to as a "mandatory sinking fund payment," and
any payment in excess of such minimum amount provided for by the terms of the
Securities of any series is herein referred to as an "optional sinking fund
payment." The date on which a sinking fund payment is to be made is herein
referred to as the "sinking fund payment date."
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Securities in cash, the Issuer may at
its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise
acquired (except as aforesaid) by the Issuer and delivered to the Trustee for
cancellation pursuant to Section 2.10, (b) receive credit for optional sinking
fund payments (not previously so, credited) made pursuant to this Section
12.5, or (c) receive credit for Securities of such series (not previously so
credited) redeemed by the Issuer through any optional redemption provision
contained in the terms of such series. Securities so delivered or credited
shall be received or credited by the Trustee at the sinking fund redemption
price specified in such Securities.
On or before the 60th day next preceding each sinking fund payment
date for any series, the Issuer will deliver to the Trustee an Officers'
Certificate (a) specifying the portion of the mandatory sinking fund payment
to be satisfied by payment of cash and the portion to be satisfied by credit
of Securities of such series and the basis for such credit, (b) stating that
none of the Securities of such series to be so credited has theretofore been
so credited, (c) stating that no defaults in the payment of interest or Events
of Default with respect to such series have occurred (which have not been
waived or cured or otherwise ceased to exist) and are continuing, and (d)
stating whether or not the Issuer intends to exercise its right to make an
optional sinking fund payment with respect to such series and, if so,
specifying the amount of such optional sinking fund payment which the Issuer
intends to pay on or before the next succeeding sinking fund payment date. Any
Securities of such series to be credited and required to be delivered to the
Trustee in order for the Issuer to be entitled to credit therefor as aforesaid
which have not theretofore been delivered to the Trustee shall be delivered
for cancellation pursuant to Section 2.10 to the Trustee with such Officers'
Certificate (or reasonably promptly thereafter if acceptable to the Trustee).
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Such Officers' Certificate shall be irrevocable and upon its receipt by the
Trustee the Issuer shall become unconditionally obligated to make all the cash
payments or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Issuer, on or before any
such 60th day, to deliver such Officers' Certificate and Securities (subject
to the parenthetical clause in the second preceding sentence) specified in
this paragraph, if any, shall not constitute a default but shall constitute,
on and as of such date, the irrevocable election of the Issuer (i) that the
mandatory sinking fund payment for such series due on the next succeeding
sinking fund payment date shall be paid entirely in cash without the option to
deliver or credit Securities of such series in respect thereof, and (ii) that
the Issuer will make no optional sinking fund payment with respect to such
series as provided in this Section 12.5.
If the sinking fund payment or payments (mandatory or optional or
both) to be made in cash on the next succeeding sinking fund payment date plus
any unused balance of any preceding sinking fund payments made in cash shall
exceed $50,000, or a lesser sum if the Issuer shall so request with respect to
the Securities of any particular series, such cash shall be applied on the
next succeeding sinking fund payment date to the redemption of Securities of
such series at the sinking fund redemption price together with accrued
interest, if any, to the date fixed for redemption. If such amount shall be
$50,000 or less and the Issuer makes no such request, then it shall be carried
over until a sum in excess of $50,000 is available. The Trustee shall select,
in the manner provided in Section 12.2, for redemption on such sinking fund
payment date a sufficient principal amount of Securities of such series to
absorb said cash, as nearly as may be, and shall (if requested in writing by
the Issuer) inform the Issuer of the serial numbers of the Securities of such
series (or portions thereof) so selected. The Issuer, or the Trustee, in the
name and at the expense of the Issuer (if the Issuer shall so request the
Trustee in writing) shall cause notice of redemption of the Securities of such
series to be given in substantially the manner provided in Section 12.2 (and
with the effect provided in Section 12.3) for the redemption of Securities of
such series in part at the option of the Issuer. The amount of any sinking
fund payments not so applied or allocated to the redemption of Securities of
such series shall be added to the next cash sinking fund payment for such
series and, together with such payment, shall be applied in accordance with
the provisions of this Section 12.5. Any and all sinking fund moneys held on
the stated maturity date of the Securities of any particular series (or
earlier, if such maturity is accelerated), which are not held for the payment
or redemption of particular Securities of such series shall be applied,
together with other moneys, if necessary, sufficient for the purpose, to the
payment of the principal of, and interest, if any, on, the Securities of such
series at maturity.
On or before each sinking fund payment date, the Issuer shall pay to
the Trustee in cash or shall otherwise provide for the payment of all
interest, if any, accrued to the date fixed for redemption on Securities to be
redeemed on such sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities
of a series with sinking fund moneys or give any notice of redemption of
Securities for such series by operation of the sinking fund during the
continuance of a default in payment of interest on such Securities or of any
Event of Default with respect to such series except that, where the giving of
notice of redemption of any Securities shall theretofore have been made, the
Trustee shall redeem or cause to be redeemed such Securities, provided that it
shall have received from the Issuer a sum sufficient for such redemption.
Except as aforesaid, and subject to Article Thirteen, any moneys in the
sinking fund for such series at the time when any such default or Event of
Default known to a Responsible Officer of the Trustee shall occur, and any
moneys thereafter paid into the sinking fund, shall, during the continuance of
such default or Event of Default, be deemed to have been collected under
Article Five and held for the payment of all such Securities. In case such
Event of Default shall have been waived as provided in Article Five or the
default cured on or before the 60th day preceding the sinking fund payment
date in any year, such moneys shall thereafter be applied on the next
succeeding sinking fund payment date in accordance with this Section to the
redemption of such Securities.
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ARTICLE THIRTEEN
SUBORDINATION
SECTION 13.1. Securities Subordinated to Senior Indebtedness. (a)
The Issuer covenants and agrees, and each Holder of Securities of each series,
by his acceptance thereof, likewise covenants and agrees, that anything in
this Indenture or the Securities of any series to the contrary
notwithstanding, the indebtedness evidenced by the Securities of each series
is subordinate and junior in right of payment, to the extent provided herein,
to all Senior Indebtedness, whether outstanding on the date of execution of
this Indenture or thereafter created, incurred or assumed, and that the
subordination is for the benefit of the holders of Senior Indebtedness but the
Securities shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of the Issuer. The Securities shall rank senior to
all existing and future Indebtedness of the Issuer that is neither Senior
Indebtedness nor Senior Subordinated Indebtedness and only Indebtedness of the
Issuer that is Senior Indebtedness shall rank senior to the Securities in
accordance with the provisions set forth herein.
(b) Subject to Section 13.4, if (i) the Issuer shall default in the
payment of any principal of, premium, if any, or interest, if any, on any
Senior Indebtedness when the same becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration of acceleration or
otherwise, or (ii) any other default shall occur with respect to Senior
Indebtedness and the maturity of such Senior Indebtedness has been accelerated
in accordance with its terms, then, upon written notice of such default to the
Issuer and the Trustee by the holders of Senior Indebtedness or any trustee
therefor, unless and until, in either case, the default has been cured or
waived, or has ceased to exist, or any such acceleration has been rescinded or
such Senior Indebtedness has been paid in full, no direct or indirect payment
(in cash, property, securities, by set-off or otherwise) shall be made or
agreed to be made on account of the principal of, premium, if any, or
interest, if any, on any of the Securities, or in respect of any redemption,
retirement, purchase or other acquisition of any of the Securities other than
those made in capital stock of the Issuer (or cash in lieu of fractional
shares thereof).
(c) If any default (other than a default described in paragraph (b)
of this Section 13.1) shall occur under the Senior Indebtedness, pursuant to
which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods occurs (a "Senior Nonmonetary
Default"), then, upon the receipt by the Issuer and the Trustee of written
notice thereof (a "Payment Notice") from or on behalf of holders of such
Senior Indebtedness specifying an election to prohibit such payment and other
action by the Issuer in accordance with the following provisions of this
paragraph (c), the Issuer may not make any payment or take any other action
that would be prohibited by paragraph (b) of this Section 13.1 during the
period (the "Payment Blockage Period") commencing on the date of receipt of
such Payment Notice and ending on the earlier of (i) the date, if any, on
which the holders of such Senior Indebtedness or their representative notify
the Trustee that such Senior Nonmonetary Default is cured or waived or ceases
to exist or the Senior Indebtedness to which such Senior Nonmonetary Default
relates is discharged or (ii) the 179th day after the date of receipt of such
Payment Notice. Notwithstanding the provisions described in the immediately
preceding sentence, the Issuer may resume payments on the Securities following
such Payment Blockage Period. Any number of Payment Notices may be given;
provided, however, that (i) not more than one Payment Notice shall be given
within a period of any 360 consecutive days, and (ii) no default that existed
upon the date of such Payment Notice or the commencement of such Payment
Blockage Period (whether or not such event of default is on the same issue of
Senior Indebtedness) shall be made the basis for the commencement of any other
Payment Blockage Period.
(d) If (i) (A) without the consent of the Issuer, a receiver,
conservator, liquidator or trustee of the Issuer or of any of its property is
appointed by the order or decree of any court or agency or
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supervisory authority having jurisdiction, and such decree or order remains in
effect for more than 60 days or (B) the Issuer is adjudicated bankrupt or
insolvent or (C) any of its property is sequestered by court order and such
order remains in effect for more than 60 days or (D) a petition is filed
against the Issuer under any state or federal bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, liquidation or
receivership law of any jurisdiction whether now or hereafter in effect
(including without limitation the Bankruptcy Code), and is not dismissed
within 60 days after such filing; or (ii) the Issuer (A) commences a voluntary
case or other proceeding seeking liquidation, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, liquidation or other relief
with respect to itself or its debt or other liabilities under any bankruptcy,
insolvency or other similar law now or hereafter in effect (including without
limitation the Bankruptcy Code) or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or (B) consents to any such relief or to the
appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against it, or (C) fails generally to, or
cannot, pay its debts generally as they become due or (D) takes any corporate
action to authorize or effect any of the foregoing; or (iii) any Subsidiary of
the Issuer takes, suffers or permits to exist any of the events or conditions
referred to in the foregoing clause (i) or (ii), then all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made to any Holder of
any Securities on account thereof. Any payment or distribution, whether in
cash, securities or other property (other than securities of the Issuer or any
other corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in these
subordination provisions with respect to the indebtedness evidenced by the
Securities to the payment of all Senior Indebtedness then outstanding and to
any securities issued in respect thereof under any such plan of reorganization
or adjustment) which would otherwise (but for these subordination provisions)
be payable or deliverable in respect of the Securities of any series shall be
paid or delivered directly to the holders of Senior Indebtedness in accordance
with the priorities then existing among such holders until all Senior
Indebtedness (including any interest thereon accruing after the commencement
of any such proceedings) shall have been paid in full. In the event of any
such proceeding, after payment in full of all sums owing with respect to
Senior Indebtedness, the Holders of the Securities, together with the holders
of any obligations of the Issuer ranking on a parity with the Securities,
shall be entitled to be paid from the remaining assets of the Issuer the
amounts at the time due and owing on account of unpaid principal of and
interest, if any, on the Securities and such other obligations before any
payment or other distribution, whether in cash, property or otherwise, shall
be made on account of any capital stock or any obligations of the Issuer
ranking junior to the Securities and such other obligations.
(e) If, notwithstanding the foregoing, any payment or distribution
of any character, whether in cash, securities or other property (other than
securities of the Issuer or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least
to the extent provided in the subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness then outstanding and to any securities issued in respect thereof
under any such plan of reorganization or readjustment), shall be received by
the Trustee or any Holder in contravention of any of the terms hereof, such
payment or distribution of securities shall be received in trust for the
benefit of and shall be paid over or delivered and transferred to the holders
of the Senior Indebtedness then outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full. In the event of the failure of the Trustee or any Holder
to endorse or assign any such payment, distribution or security, each holder
of Senior Indebtedness is hereby irrevocably authorized to endorse or assign
the same.
(f) No present or future holder of any Senior Indebtedness shall be
prejudiced in the right to enforce subordination of the indebtedness evidenced
by the Securities by any act or failure to act on the
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part of the Issuer or any Holder of Securities. Nothing contained herein shall
impair, as between the Issuer and the Holders of Securities of each series,
the obligation of the Issuer to pay to such Holders the principal of and
interest, if any, on such Securities or prevent the Trustee or the Holder from
exercising all rights, powers and remedies otherwise permitted by applicable
law or hereunder upon a default or Event of Default hereunder, all subject to
the rights of the holders of the Senior Indebtedness to remove cash,
securities or other property otherwise payable or deliverable to the Holders.
(g) Senior Indebtedness shall not be deemed to have been paid in
full unless the holders thereof shall have received cash, securities or other
property equal to the amount of such Senior Indebtedness then outstanding.
Upon the payment in full of all Senior Indebtedness, the Holders of Securities
of each series shall be subrogated to all rights of any holders of Senior
Indebtedness to receive any further payment or distributions applicable to the
Senior Indebtedness until the indebtedness evidenced by the Securities of such
series shall have been paid in full and such payments or distributions
received by such Holders, by reason of such subrogation, of cash, securities
or other property which otherwise would be paid or distributed to the holders
of Senior Indebtedness, shall, as between the Issuer and its creditors other
than the holders of Senior Indebtedness, on the one hand, and such Holders, on
the other hand, be deemed to be a payment by the Issuer on account of Senior
Indebtedness, and not on account of the Securities of such series.
(h) The provisions of this Section 13.1 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Issuer in respect
of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
(i) The securing of any obligations of the Issuer, otherwise ranking
on a parity with the Securities or ranking junior to the Securities, shall not
be deemed to prevent such obligations from constituting, respectively,
obligations ranking on a parity with the Securities or ranking junior to the
Securities.
SECTION 13.2. Reliance on Certificate of Liquidating Agent; Further
Evidence as to Ownership of Senior Indebtedness. Upon any payment or
distribution of assets of the Issuer, the Trustee and the Holders shall be
entitled to rely upon an order or decree issued by any court of competent
jurisdiction in which such dissolution or winding up or liquidation or
reorganization or arrangement proceedings are pending or upon a certificate of
the bankruptcy trustee, receiver, assignee for the benefit of creditors or
other Person making such payment or distribution, delivered to the Trustee or
to the Holders, for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Issuer, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Thirteen. In the absence of any such bankruptcy
trustee, receiver, assignee or other Person, the Trustee shall be entitled to
rely upon written notice by a Person representing himself to be a holder of
Senior Indebtedness (or a trustee or representative on behalf of such holder)
as evidence that such Person is a holder of Senior Indebtedness (or is such a
trustee or representative). If the Trustee determines, in good faith, that
further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distributions
pursuant to this Article Thirteen, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, as to the extent to which
such Person is entitled to participate in such payment or distribution, and to
other facts pertinent to the rights of such Person under this Article
Thirteen, and if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
SECTION 13.3. Payment Permitted If No Default. Nothing contained in
this Article Thirteen or elsewhere in this Indenture, or in any of the
Securities, shall prevent (a) the Issuer at any time,
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except during the pendency of any default with respect to Senior Indebtedness
described in Section 13.1(b) or Section 13.1(c) or of any of the events
described in Section 13.1(d), from making payments of the principal of or
interest, if any, on the Securities, or (b) the application by the Trustee or
any paying agent of any moneys deposited with it hereunder to payments of the
principal of or interest, if any, on the Securities, if, at the time of such
deposit, the Trustee or such paying agent, as the case may be, did not have
the written notice provided for in Section 13.5 of any event prohibiting the
making of such deposit, or if, at the time of such deposit (whether or not in
trust) by the Issuer with the Trustee or paying agent (other than the Issuer)
such payment would not have been prohibited by the provisions of this Article
Thirteen, and the Trustee or any paying agent shall not be affected by any
notice to the contrary received by it on or after such date.
SECTION 13.4. Disputes with Holders of Certain Senior Indebtedness.
Any failure by the Issuer to make any payment on or under any Senior
Indebtedness, other than any Senior Indebtedness as to which the provisions of
this Section 13.4 shall have been waived by the Issuer in the instrument or
instruments by which the Issuer incurred, assumed, guaranteed or otherwise
created such Senior Indebtedness, shall not be deemed a default under Section
13.1 hereof if (i) the Issuer shall be disputing its obligation to make such
payment or perform such obligation, and (ii) either (A) no final judgment
relating to such dispute shall have been issued against the Issuer which is in
full force and effect and is not subject to further review, including a
judgment that has become final by reason of the expiration of the time within
which a party may seek further appeal or review, or (B) if a judgment that is
subject to further review or appeal has been issued, the Issuer shall in good
faith be prosecuting an appeal or other proceeding for review, and a stay of
execution shall have been obtained pending such appeal or review.
SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition.
Anything in this Article Thirteen or elsewhere in this Indenture contained to
the contrary notwithstanding, the Trustee shall not at any time be charged
with knowledge of the existence of any facts which would prohibit the making
of any payment of moneys to or by the Trustee and shall be entitled to assume
conclusively that no such facts exist and that no event specified in clauses
(b) and (c) of Section 13.1 has happened unless and until the Trustee shall
have received an Officers' Certificate to the effect or notice in writing to
that effect signed by or on behalf of the holder or holders, or the
representatives, of Senior Indebtedness who shall have been certified by the
Issuer or otherwise established to the reasonable satisfaction of the Trustee
to be such holder or holders or representatives or from any trustee under any
indenture pursuant to which such Senior Indebtedness shall be outstanding;
provided, however, that, if the Trustee shall not have received the Officers'
Certificate or notice provided for in this Section 13.5 at least three
Business Days preceding the date upon which by the terms hereof any moneys
become payable for any purpose (including, without limitation, the payment of
either the principal of or interest, if any, on any Security), then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to receive such moneys and apply the same to the purpose
for which they were received and shall not be affected by any notice to the
contrary that may be received by it within three Business Days preceding such
date. The Issuer shall give prompt written notice to the Trustee and to each
paying agent of any facts that would prohibit any payment of moneys to or by
the Trustee or any paying agent, and the Trustee shall not be charged with
knowledge of the curing of any default or the elimination of any other fact or
condition preventing such payment or distribution unless and until the Trustee
shall have received an Officers' Certificate to such effect.
SECTION 13.6. Trustee to Effectuate Subordination. Each Holder of
Securities by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate
the subordination as between such Holder and holders of Senior Indebtedness as
provided in this Article Thirteen and appoints the Trustee its
attorney-in-fact for any and all such purposes.
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SECTION 13.7. Rights of Trustee as Holder of Senior Indebtedness.
The Trustee shall be entitled to all the rights set forth in this Article
Thirteen with respect to any Senior Indebtedness which may at the time be held
by it, to the same extent as any other holder of Senior Indebtedness and
nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder. Nothing in this Article Thirteen shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.6.
SECTION 13.8. Article Applicable to Paying Agents. In case at any
time any paying agent other than the Trustee shall have been appointed by the
Issuer and be then acting hereunder, the term "Trustee" as used in this
Article Thirteen shall in such case (unless the context shall otherwise
require) be construed as extending to and including such paying agent within
its meaning as fully for all intents and purposes as if the paying agent were
named in this Article Thirteen in addition to or in place of the Trustee;
provided, however, that Sections 13.5 and 13.7 shall not apply to the Issuer
if it acts as paying agent.
SECTION 13.9. Subordination Rights Not Impaired by Acts or Omissions
of the Issuer or Holders of Senior Indebtedness. No right of any present or
future holders of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Issuer or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Issuer with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with. The
holders of Senior Indebtedness, may at any time or from time to time and in
their absolute direction, change the manner, place or terms of payment, change
or extend the time of payment of, or renew or alter, any such Senior
Indebtedness, or amend or supplement any instrument pursuant to which any such
Senior Indebtedness is issued or by which it may be secured, or release any
security therefor, or exercise or refrain from exercising any other of their
rights under such Senior Indebtedness, including, without limitation, the
waiver of default thereunder, all without notice to or assent from the Holders
of the Securities or the Trustee and without affecting the obligations of the
Issuer, the Trustee or the Holders of Securities under this Article Thirteen.
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of the Senior Indebtedness, and shall not be liable to any such
holders if it shall mistakenly pay over or distribute money or assets to
Securityholders or the Issuer. With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants or obligations as are specifically set forth in this Article
Thirteen and no implied covenants or obligations with respect to holders of
Senior Indebtedness shall be read into this Indenture against the Trustee.
ARTICLE FOURTEEN
SUBORDINATED GUARANTEE
SECTION 14.1. Applicability of Article. The provisions of this
Article shall be applicable to Hovnanian and to each of the Guarantors
specified pursuant to Section 2.3 for the Guarantee of Securities of a series.
SECTION 14.2. Guarantee. Each Guarantor of a particular series of
Securities hereby unconditionally guarantees (each such guarantee to be
referred to herein as a "Guarantee"), jointly and severally with each other
Guarantor of the Securities of that series, if any, to each Holder of such
Securities authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
this Indenture, such Securities or the obligations of the Company hereunder or
thereunder, (i) the due and punctual payment of the principal of and any
premium
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or interest on such Securities, whether at maturity or on an interest payment
date, by acceleration, pursuant to an offer to purchase such Securities or
otherwise, and interest on the overdue principal of and interest, if any, on
such Securities, if lawful, and all other obligations of the Company to the
Holders of such Securities or the Trustee hereunder or thereunder shall be
promptly paid in full, all in accordance with the terms hereof and thereof
including all amounts payable to the Trustee under Section 6.6 hereof, and
(ii) in case of any extension of time of payment or renewal of any such
Securities or any of such other obligations, the same shall be promptly paid
in full when due or to be performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or
otherwise.
If the Company fails to make any payment when due of any amount so
guaranteed for whatever reason, the Guarantor of the Securities of that series
shall be obligated, jointly and severally with each other Guarantor, if any,
to pay the same immediately. Each Guarantor hereby agrees that its obligations
hereunder shall be continuing, absolute and unconditional, irrespective of,
and shall be unaffected by, the validity, regularity or enforceability of the
Securities, this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Securities or the Trustee with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of such
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, demand of performance, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding
first against the Company, the benefit of discussion, protest, notice and all
demand whatsoever and covenants that its Guarantee shall not be discharged
except by complete performance of the obligations contained in the Securities
guaranteed by such Guarantee, in this Indenture and in this Article 14. If any
Holder of Securities of a series guaranteed hereby or the Trustee is required
by any court or otherwise to return to the Company or any Guarantor of such
Securities, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor, any amount paid by the
Company or any Guarantor of such Securities to the Trustee or such Holder,
this Article 14, to the extent theretofore discharged with respect to any
Guarantee of such Securities, shall be reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Securities of a series guaranteed
hereby by such Guarantor in respect of any obligations guaranteed hereby by
such Guarantee until payment in full of all such obligations. Each Guarantor
further agrees that, as between such Guarantor, on the one hand, and the
Holders of Securities of a series guaranteed hereby by such Guarantor and the
Trustee on the other hand, (i) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article 5 hereof for the purposes of
such Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby
and (ii) in the event of any acceleration of such obligations as provided in
Article 5 hereof such obligations (whether or not due and payable) shall
forthwith become due and payable by such Guarantor, jointly severally with any
other Guarantor of such Securities, for the purpose of this Article 14. In
addition, without limiting the foregoing, upon the effectiveness of an
acceleration under Article 5, the Trustee may make a demand for payment on the
Securities under any Guarantee provided hereunder and not discharged.
With respect to each Guarantee by a Guarantor, such Guarantor shall
be subrogated to all rights of the Holder of any Securities guaranteed hereby
by such Guarantee against the Company in respect of any amounts paid to such
Holder by such Guarantor pursuant to the provisions of such Guarantee;
provided that the 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 and interest on all such Securities shall have been paid in full.
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The Guarantees provided in this Section 14.1 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by the
Trustee or any duly appointed agent.
SECTION 14.3. Guarantee Subordinated to Senior Debt of the
Guarantor.
Each Guarantor agrees, and each Holder of the Securities by his
acceptance thereof likewise agrees, that the payments pursuant to the
Guarantee by each Guarantor shall be subordinated in accordance with the
following provisions of this Article 14 to the prior payment in full of all
Senior Debt of each Guarantor.
"Senior Debt of each Guarantor" means the Principal of and interest
on:
(1) all indebtedness for money borrowed by each Guarantor or which
is evidenced by a bond, debenture, note or other similar
instrument or agreement whether or not for money borrowed;
(2) lease obligations of each Guarantor;
(3) all indebtedness, secured or unsecured, in connection with the
acquisition or improvement of any property or asset or the
acquisition of any business by each Guarantor;
(4) all indebtedness secured by any mortgage, lien, pledge, charge
or encumbrance upon property owned by each Guarantor and all
indebtedness secured in the manner specified in this clause (4)
even if a Guarantor has not assumed or become liable for the
payment thereof;
(5) all customer deposits held by each Guarantor in escrow accounts
pending closing of the related sales;
(6) all indebtedness of each Guarantor created or arising under any
conditional sale or other title retention agreement with
respect to property acquired by each Guarantor or otherwise
representing the deferred and unpaid balance of the purchase
price of any such property, including all indebtedness created
or arising in the manner specified in this clause (6) even
though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to
repossession or sale of such property;
(7) guarantees by each Guarantor, direct or indirect, of any
indebtedness of another Person of the types referred to in
clauses (1), (2), (3), (4), (5) or (6); and
(8) contingent obligations of each Guarantor in respect of, or to
purchase or otherwise acquire or be responsible or liable for
through the purchase of products or services, irrespective of
whether such products are delivered or such services are
rendered, any such indebtedness referred to in clauses (1),
(2), (3), (4), (5) or (6),
which indebtedness, lease obligation, deposit, guarantee or contingent
obligation each Guarantor has directly or indirectly created, incurred,
assumed, guaranteed or otherwise become liable or responsible for, whether
currently outstanding or hereafter created. All references to indebtedness
include any
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renewals, extensions, refundings, amendments and modifications of any such
indebtedness issued in exchange for such indebtedness; provided, however, that
Senior Debt of each Guarantor shall not include, without limitation (i) a
Guarantee, (ii) the guarantee by each Guarantor of the Subordinated Notes,
(iii) accounts payable or any other indebtedness to trade creditors created or
assumed by each Guarantor in the ordinary course of business in connection
with the obtaining of materials or services, (iv) any liability for federal,
state or local taxes owed or owing by each Guarantor and (v) any indebtedness
as to which, in the instrument creating or evidencing the same or pursuant to
which the same is outstanding, it is provided that such indebtedness is on a
parity with or otherwise not superior in right of payment to a Guarantee.
This Article 14 shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Debt of each Guarantor, and such provisions are made for the benefit of
the holders of Senior Debt of each Guarantor, and such holders are made
obligees hereunder and any one or more of them may enforce such provisions.
SECTION 14.4. Guarantors Not to Make Payments With Respect to
Securities in Certain Circumstances.
(a) Upon the maturity of the principal of any Senior Debt of each
Guarantor (other than payment of sinking fund installments) by lapse of
time, acceleration or otherwise, all principal thereof and interest
thereon shall first be paid in full, or such payment duly provided for in
cash or in a manner satisfactory to the holders of such Senior Debt of
each Guarantor, before any payment, pursuant to the Guarantee, is made on
account of the principal or interest on the Securities or to acquire any
of the Securities or on account of the mandatory redemption provisions in
the Securities (except mandatory redemption payments made in respect of
Securities acquired by each Guarantor before the maturity of such Senior
Debt of each Guarantor).
(b) Unless Section 14.4 shall be applicable, upon (1) the occurrence
of a Payment Default with respect to Senior Debt of each Guarantor and
receipt by each Guarantor and the Trustee of written notice of such
occurrence or (2) upon the acceleration of such indebtedness, then no
payment or distribution of any assets of each Guarantor of any kind or
character shall be made by each Guarantor or the Trustee on account of
principal of (or premium, if any) or interest on the Securities or on
account of the purchase or redemption or other acquisition of Securities,
unless and until such Payment Default shall have been cured or waived in
writing or shall have ceased to exist or such Senior Debt of each
Guarantor shall have been discharged, after which each Guarantor shall
resume making any and all required payments in respect of the Securities,
including any missed payments.
(c) Unless Section 14.4 shall be applicable, upon (1) the occurrence
of a Non-Payment Default and (2) receipt by the Trustee of written notice
of such occurrence, then no payment or distribution of any assets of each
Guarantor of any kind or character shall be made by each Guarantor or the
Trustee on account of any principal of (or premium, if any) or interest
on the Securities or on account of the purchase or redemption or other
acquisition of Securities, for a period ("Payment Blockage Period")
commencing on the earlier of the date of receipt by the Trustee of such
written notice from the holder of Senior Debt of each Guarantor or of the
Company, or any representative of a holder of Senior Debt of each
Guarantor or of the Company unless and until (subject to any blockage of
payment that may then be in effect under subsection (a) of this Section)
the earlier of (x) more than 120 days shall have elapsed since receipt of
such written notice by each Guarantor or the Trustee, whichever was
earlier, (y) such Non-Payment Default shall have been cured or waived in
writing or shall have ceased to exist or such Senior Debt of each
Guarantor or of the Company shall have been discharged or (z) such
Payment Blockage Period shall have been terminated by written notice to
each Guarantor or to the
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Company, as the case may be, or to the Trustee from the holders of the
Senior Debt of each Guarantor or of the Company or any representative of
the holders of the Senior Debt of each Guarantor or of the Company
initiating such Payment Blockage Period, after which, in the case of
clause (x), (y) or (z), each Guarantor shall promptly resume making any
and all required payments in respect of the Securities, including any
missed payments. In no event shall a Payment Blockage Period extend
beyond 120 days from the date of the receipt by the Trustee of the notice
referred to in clause (2) hereof (the "Initial Period"). Any number of
additional Payment Blockage Periods may be commenced during the Initial
Period; provided, however, that no such additional period shall extend
beyond the Initial Period. After the expiration of the Initial Period, no
Payment Blockage Period may be commenced on the basis of a Non-Payment
Default on the Senior Debt which was the basis of a Payment Blockage
Period commenced during the Initial Period until at least 270 consecutive
days have elapsed from the last day of the Initial Period. No Non-Payment
Default which existed or was continuing on the date of the commencement
of any Payment Blockage Period and of which the applicable Senior Debt
holder(s) are aware shall be, or be made, the basis for the commencement
of a second Payment Blockage Period whether or not within a period of 270
consecutive days unless such event of default shall have been cured or
waived for a period of not less than 90 consecutive days.
(d) In the event that notwithstanding the provisions of this Section
14.3 each Guarantor shall make, pursuant to this Guarantee, any payment
or distribution of any character to the Trustee on account of the
principal of or interest on the Securities, or on account of the
mandatory redemption provisions, after the happening of an event of
default with respect to any Senior Debt of each Guarantor based on a
default in the payment of the principal or interest on Senior Debt of
each Guarantor, or after receipt by the Trustee of written notice as
provided in this Section 14.3 of an Event of Default with respect to any
Senior Debt of each Guarantor, or after the acceleration of the
Securities of any series pursuant to Section 5.1, then, but only if the
Trustee is in receipt of the notice specified in Section 14.7, unless and
until such default or event of default shall have been cured or waived or
shall have ceased to exist, or such acceleration shall have been
rescinded, such payment (subject to the provisions of Sections 14.7 and
14.8) shall be held by the Trustee in trust for the benefit of, and, if
the Senior Debt of each Guarantor shall have been declared immediately
due and payable, shall be paid forthwith over and delivered to, the
holders of Senior Debt of each Guarantor (pro rata as to each of such
holders on the basis of the respective amounts of Senior Debt of each
Guarantor held by them) or their representative or the trustee under the
indenture or other agreement (if any) pursuant to which Senior Debt of
each Guarantor may have been issued, as their respective interests may
appear, such payments to be made in accordance with an Officers'
Certificate as provided in Section 11.5 (on which the Trustee may
conclusively rely) identifying all holders of Senior Debt of each
Guarantor and the principal amount of Senior Debt of each Guarantor then
outstanding held by each and stating the reasons why such Officers'
Certificate is being delivered to the Trustee, for application to the
payment of all Senior Debt of each Guarantor remaining unpaid to the
extent necessary to pay all Senior Debt of each Guarantor in full in
accordance with its terms, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Debt of each Guarantor.
In the event of the failure of any Holder of a Security to endorse or
assign any such payment or distribution, each holder of Senior Debt of
each Guarantor is hereby irrevocably authorized to endorse or assign the
same. Each Guarantor shall give prompt notice to the Trustee of any
default under any Senior Debt of each Guarantor or under any agreement
pursuant to which Senior Debt of each Guarantor may have been issued, as
required by Section 3.5.
SECTION 14.5. Guarantee Subordinated to Prior Payment of All Senior
Debt of each Guarantor on Dissolution, Winding Up, Liquidation or
Reorganization of a Guarantor.
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In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to a Guarantor, its creditors or its property, (ii) any
case or proceeding for the liquidation, dissolution or other winding-up of a
Guarantor, voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings, (iii) any assignment by such Guarantor for the benefit
of creditors, or (iv) any other marshalling of the assets of such Guarantor:
(a) the holders of all Senior Debt of such Guarantor shall first be
entitled to receive payment in full (or to have such payment
duly provided for) of the principal and interest due thereon
(including any interest thereon accruing after commencement of
any such proceeding) before the Holders of the Securities are
entitled to receive, pursuant to this Guarantee any payment or
any distribution, whether in cash, securities or other
property, on account of the principal or interest on the
Securities;
(b) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities
(other than securities of such Guarantor as reorganized or
readjusted or securities of such Guarantor or any other
company, trust or corporation provided for by a plan of
reorganization or readjustment, junior or the payment of which
is otherwise subordinate, at least to the extent provided in
this Article, to the payment of all Senior Debt of such
Guarantor at the time outstanding and to the payment of all
securities issued in exchange therefor to the holders of the
Senior Debt of such Guarantor at the time outstanding), to
which the Holders of the Securities or the Trustee on behalf of
the Holders of the Securities would be entitled, pursuant to
this Guarantee except for the provisions of this Article 14,
including any such payment or distribution which may be payable
or deliverable by reason of the payment of any other
indebtedness of such Guarantor being subordinated to the
payment of the Securities, shall be paid by the liquidating
trustee or agent or other person making such payment or
distribution directly to the holders of Senior Debt of such
Guarantor or their representative(s), or to the trustee under
any indenture under which Senior Debt of such Guarantor may
have been issued (pro rata as to each such holder,
representative or trustee on the basis of the respective
amounts of unpaid Senior Debt of such Guarantor held or
represented by each), to the extent necessary to make payment
in full of all Senior Debt of such Guarantor remaining unpaid
after giving effect to any concurrent payment or distribution
or provision therefor to the holders of such Senior Debt of
such Guarantor; and
(c) in the event that notwithstanding the foregoing provisions of
this Section 14.4, any payment or distribution of assets of
such Guarantor of any kind or character, whether in cash,
property or securities shall be received, pursuant to the
Guarantee, by the Trustee or the Holders of the Securities on
account of principal or interest on the Securities before all
Senior Debt of such Guarantor is paid in full, or effective
provisions made for its payment, such payment or
distribution(subject to the provisions of Sections 14.7 and
14.8) shall be received and held in trust for and shall be paid
over or delivered to the liquidating trustee, agent or other
person making such payment or distribution or to the holders of
the Senior Debt of such Guarantor remaining unpaid or
unprovided for or their representative, or to the trustee under
any indenture under which Senior Debt of such Guarantor may
have been issued (pro rata as provided in subsection (b)
above), for application to the payment of such Senior Debt of
such Guarantor until all such Senior Debt of such Guarantor
shall have been paid in full, after
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giving effect to any concurrent payment or distribution or
provision therefor to the holders of such Senior Debt of such
Guarantor.
If a Guarantor effects a transaction permitted by Article Nine, such
transaction shall not be deemed to be a dissolution, winding up, liquidation
or reorganization of such Guarantor for purposes of this Section.
A Guarantor shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of such Guarantor,
assignment for the benefit of creditors by such Guarantor or any other
marshalling of assets of such Guarantor.
SECTION 14.6. Holders to be Subrogated to Rights of Holders of
Senior Debt of each Guarantor.
Subject to the payment in full of all Senior Debt of each Guarantor,
the Holders of the Securities shall be subrogated to the rights of the holders
of Senior Debt of each Guarantor to receive payments or distributions of
assets of each Guarantor applicable to the Senior Debt of each Guarantor until
all amounts owing under the Guarantee shall be paid in full and for the
purpose of such subrogation no payments or distributions to the holders of
Senior Debt of each Guarantor by virtue of this Article 14 which otherwise
would have been made to the Holders of the Securities, shall, as between each
Guarantor, its creditors other than holders of its Senior Debt of each
Guarantor and the Holders, be deemed to be a payment by each Guarantor to or
on account of the Senior Debt of each Guarantor, it being understood that the
provisions of this Article 14 are solely for the purpose of defining the
relative rights of the holders of Senior Debt of the Guarantors on the one
hand and the Holders on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article shall have been
applied, pursuant to the provisions of this Article, to the payment of Senior
Debt of each Guarantor, then and in such case, the Holders shall be entitled
to receive from the holders of such Senior Debt of each Guarantor at the time
outstanding any payments or distributions received by such holders of such
Senior Debt of each Guarantor in excess of the amount sufficient to pay all
amounts payable under or in respect of such Senior Debt of each Guarantor in
full.
SECTION 14.7. Obligations of each Guarantor Unconditional.
Nothing contained in this Article 14 or elsewhere in this Indenture
or in any Security is intended to or shall impair, as between a Guarantor and
the Holders, the obligations of such Guarantor, which are absolute and
unconditional, to pay to the Holders the principal of and interest on the
Securities as and when the same shall become due and payable in accordance
with the provisions of this Guarantee or is intended to or shall affect the
relative rights of the Holders and creditors of a Guarantor other than the
holders of the Senior Debt of such Guarantor, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon Default under this Indenture,
subject to the rights, if any, under this Article 14 of the holders of Senior
Debt of a Guarantor in respect of cash, property or securities of such
Guarantor received upon the exercise of any such remedy.
Upon any distribution of assets of a Guarantor referred to in this
Article 14, the Trustee, subject to the provisions of Sections 6.1 and 6.2,
and the Holders of the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other person making any
distribution to the Trustee or to the Holders of the Securities, for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior
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Debt and other indebtedness of each Guarantor, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 14.
SECTION 14.8. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee, and the Trustee shall not be required to withhold payment to the
Holders of Securities as provided in Section 14.3(d), unless and until the
Trustee shall have received written notice thereof at its Corporate Trust
Office from a Guarantor or from one or more holders of Senior Debt of such
Guarantor or from any representative thereof or trustee therefor identifying
the specific sections of this Indenture involved and describing in detail the
facts that would obligate the Trustee to withhold payments to Holders of
Securities, as well as any other facts required by the next succeeding
paragraph of this Section 14.7; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Sections 6.1 and 6.2, shall
be entitled to assume conclusively that no such facts exist.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing himself to be a holder of Senior Debt
of a Guarantor (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Debt of such Guarantor or a
trustee on behalf of any such holder. In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of
any person as a holder of Senior Debt of a Guarantor to participate in any
payment or distribution pursuant to this Article 14, the Trustee may request
such person to furnish evidence to the reasonable satisfaction of the Trustee
as to the amount of Senior Debt of such Guarantor held by such person, the
extent to which such person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such person under
this Article 14, and if such evidence is not furnished the Trustee may defer
any payment to such person pending judicial determination as to the right of
such person to receive such payment.
SECTION 14.9. Application by Trustee of Monies Deposited with It.
Except as provided in Section 10 any deposit of monies by a
Guarantor with the Trustee or any Paying Agent (whether or not in trust) for
the payment of the principal or interest on any Securities shall be subject to
the provisions of Sections 14.2, 14.3, 14.4 and 14.5 except that, if prior to
the opening of business on the date on which by the terms of this Indenture
any such monies may become payable for any purpose (including, without
limitation, the payment, pursuant to this Guarantee, of either the principal
or the interest on any Security) the Trustee shall not have received with
respect to such monies the notice provided for in Section 14.7, then the
Trustee shall have full power and authority to receive such monies and to
apply the same to the purpose for which they were received and shall not be
affected by any notice to the contrary which may be received by it on or after
such date, without, however, limiting any rights that holders of Senior Debt
of a Guarantor may have to recover any such payments from the Holders in
accordance with the provisions of this Article.
SECTION 14.10. Subordination Rights Not Impaired by Acts or
Omissions of a Guarantor or Holders of Senior Debt of such Guarantor.
No right of any present or future holders of any Senior Debt of a
Guarantor to enforce subordination as provided herein shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of such
Guarantor or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by such Guarantor with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior
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Debt of such Guarantor may extend, renew, modify or amend the terms of the
Senior Debt of such Guarantor or any security therefor and release, sell or
exchange such security and otherwise deal freely with such Guarantor, all
without affecting the liabilities and obligations of the parties to this
Indenture or the Holders.
SECTION 14.11. Holders Authorize Trustee to Effectuate Subordination
of Securities.
Each Holder of the Securities by his acceptance thereof authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article 14 and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of a Guarantor (whether in bankruptcy, insolvency or
receivership proceedings, voluntary liquidation or upon assignment for the
benefit of creditors or otherwise) tending towards liquidation of the business
and assets of such Guarantor, the timely filing of a claim for the unpaid
balance, pursuant to this Guarantee, of its or his Securities in the form
required in said proceedings and cause said claim to be approved. If the
Trustee does not file a proper claim or proof of debt in the form required in
such proceeding on or prior to 30 days before the expiration of the time to
file such claim or claims, then the holders of Senior Debt of such Guarantor
have the right to file and are hereby authorized to file an appropriate claim
for and on behalf of the Holders of said Securities.
SECTION 14.12. Right of Trustee to Hold Senior Debt of a Guarantor.
The Trustee in its individual capacity, shall be entitled to all of
the rights set forth in this Article 14 in respect of any Senior Debt of a
Guarantor at any time held by it to the same extent as any other holder of
such Senior Debt of a Guarantor, and nothing in this Indenture shall be
construed to deprive the Trustee of any of its rights as such holder.
SECTION 14.13. Trustee Not Fiduciary for Holders of Senior Debt of a
Guarantor.
With respect to the holders of Senior Debt of a Guarantor, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article 14, and no implied
covenants or obligations with respect to the holders of Senior Debt of a
Guarantor shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior Debt of
a Guarantor and the Trustee shall not be liable to any holder of Senior Debt
of a Guarantor if it shall pay over or deliver to Holders of Securities, a
Guarantor or any other person monies or assets to which any holder of Senior
Debt of such Guarantor shall be entitled by virtue of this Article 14 or
otherwise.
SECTION 14.14. Article 14 Not To Prevent Events of Default.
The failure to make a payment on account of principal or interest on
the Securities of any series by reason of any provision in this Article 14
shall not be construed as preventing the occurrence of an Event of Default
under Section 5.1.
SECTION 14.15. Execution and Delivery of Guarantee. To evidence a
Guarantee set forth in this Article 14, the Guarantor hereby agrees that the
Guarantee Notation, substantially in the form of Exhibit A hereto, shall be
endorsed on each Security authenticated and delivered by the Trustee that is
guaranteed by such Guarantee and that this Indenture shall be executed on
behalf of such Guarantor by its Chairman of the Board, its President or one of
its Vice Presidents under a facsimile of its seal reproduced thereon.
-62-
Each Guarantor hereby agrees that its Guarantee shall remain in full
force and effect notwithstanding any failure to endorse the Guarantee Notation
on each such Security.
If an officer whose signature is on this Indenture or on the
Securities guaranteed hereby no longer holds that office at the time the
Trustee authenticates the Security on which a notation of the Guarantee is
endorsed, such Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of each
Guarantee thereof.
SECTION 14.16. Subordination of Indebtedness Owed by the Company to
a Guarantor.
Any indebtedness owed by the Company to a Guarantor shall be
subordinate to all obligations of the Company with respect to the Securities
and this Indenture to the same extent as the Securities are subordinated to
Senior Debt of the Company.
SECTION 14.17. Officers' Certificate.
If there occurs an event referred to in the first sentence of
Section 14.4(c) or the first sentence of Section 14.4, the applicable
Guarantor shall promptly give to the Trustee an Officers' Certificate (on
which the Trustee may conclusively rely) identifying all holders of Senior
Debt of such Guarantor and the principal amount of Senior Debt of such
Guarantor then outstanding held by each such holder and stating the reasons
why such Officers' Certificate is being delivered to the Trustee.
-63-
K. HOVNANIAN ENTERPRISES, INC.
By ___________________________
[title]
[CORPORATE SEAL]
Attest:
________________________________
Secretary
[CORPORATE SEAL]
HOVNANIAN ENTERPRISES, INC.
GUARANTOR
By ___________________________
[title]
[CORPORATE SEAL]
Attest:
________________________________
Secretary
[CORPORATE SEAL]
FIRST UNION NATIONAL BANK, AS TRUSTEE
By ___________________________
[title]
Attest:
________________________________
Trust Officer
-64-
EXHIBIT A
[FORM OF NOTATION OF SECURITY
RELATING TO GUARANTEE]
GUARANTEE
[Name of Guarantor] (hereinafter referred to as the "Guarantor",
which term includes any successor person under the Indenture (the "Indenture")
referred to in the Security upon which this notation is endorsed) (the
"Endorsed Security"), has unconditionally guaranteed (i) the due and punctual
payment of the principal of, premium, if any, and interest on the Endorsed
Security and all other Securities of the same series as the Endorsed Security
(the "Guaranteed Securities"), whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal
of, premium, if any, and interest, if any, on the Guaranteed Securities, to
the extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders of Guaranteed Securities or the
Trustee all in accordance with the terms set forth in Article 14 of the
Indenture and (ii) in case of any extension of time of payment or renewal of
any Guaranteed Securities or any of such other obligations, that the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture.
The obligations of the Guarantor to the Holders of Guaranteed
Securities and to the Trustee pursuant to the Guarantee evidenced hereby and
the Indenture are expressly set forth in Article 14 of the Indenture and
reference is hereby made to such Indenture for the terms of such Guarantee.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any personal liability under
the Guarantee evidenced hereby by reason of his or its status as such
stockholder, officer, director or incorporator.
The Guarantee evidenced hereby shall not be valid or obligatory for
any purpose until the certificate of authentication of the Guaranteed
Securities shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
Guarantor
[SEAL]
[NAME OF GUARANTOR]
By________________________________
By_________________________________
EXHIBIT B
[SUBSIDIARY GUARANTORS]
EXHIBIT 4.8
===============================================================================
K. HOVNANIAN ENTERPRISES, INC.
Issuer
and
HOVNANIAN ENTERPRISES, INC.
Guarantor
and
SUBSIDIARY GUARANTORS OF HOVNANIAN
Guarantors
and
FIRST UNION NATIONAL BANK,
as Trustee
----------------------------
INDENTURE
Dated as of ___________ ___, 2001
FORM OF SUBORDINATED INDENTURE
===============================================================================
CROSS REFERENCE SHEET*
-----------
Provisions of Trust Indenture Act of 1939 and Indenture to be dated
as of _____ among K. HOVNANIAN ENTERPRISES, INC., HOVNANIAN ENTERPRISES, INC.,
SUBSIDIARY GUARANTORS OF HOVNANIAN and FIRST UNION NATIONAL BANK, as Trustee:
Section of the Act Section of Indenture
310(a)(1), (2) and (5) 6.9
310(a)(3) and (4) Inapplicable
310(b) 6.8 and 6.10(a), (b) and (d)
310(c) Inapplicable
311(a) 6.13
311(b) 6.13
311(c) Inapplicable
312(a) 4.1 and 4.2(a)
312(b) 4.2(a) and (b)(i) and (ii)
312(c) 4.2(c)
313(a) 4.4(a)(i), (ii), (iii), (iv), (v),
(vi) and (vii)
313(a)(5) Inapplicable
313(b)(1) Inapplicable
313(b)(2) 4.4(b)
313(c) 4.4(c)
313(d) 4.4(d)
314(a) 4.3
314(b) Inapplicable
314(c)(1) and (2) 11.5
314(c)(3) Inapplicable
314(d) Inapplicable
314(e) 11.5
314(f) Inapplicable
315(a), (c) and (d) 6.1
315(b) 5.8
315(e) 5.9
316(a)(1) 5.7
316(a)(2) Not required
316(a) (last sentence) 7.4
316(b) 5.4
317(a) 5.2
317(b) 3.5(a)
318(a) 11.7
- --------------------
* This Cross Reference Sheet is not part of the Indenture.
Table of Contents
Page
ARTICLE One DEFINITIONS.......................................................1
ARTICLE Two SECURITIES........................................................8
SECTION 2.1. Forms Generally.......................................8
SECTION 2.2. Form of Trustee's Certificate of Authentication.......9
SECTION 2.3. Amount Unlimited Issuable in Series...................9
SECTION 2.4. Authentication and Delivery of Securities............12
SECTION 2.5. Execution of Securities..............................15
SECTION 2.6. Certificate of Authentication........................15
SECTION 2.7. Denomination and Date of Securities; Payments of
Interest...........................................15
SECTION 2.8. Registration, Transfer and Exchange..................16
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and
Stolen Securities..................................18
SECTION 2.10. Cancellation of Securities; Disposition Thereof.....19
SECTION 2.11. Temporary Securities................................19
SECTION 2.12. CUSIP Numbers.......................................20
ARTICLE Three COVENANTS......................................................20
SECTION 3.1. Payment of Principal and Interest....................20
SECTION 3.2. Offices for Notices and Payments, etc................20
SECTION 3.3. No Interest Extension................................20
SECTION 3.4. Appointments to Fill Vacancies in Trustee's Office...20
SECTION 3.5. Provision as to Paying Agent.........................20
ARTICLE Four SECURITYHOLDERS LISTS AND REPORTS BY THE ISSUER,
HOVNANIAN AND THE TRUSTEE....................................21
SECTION 4.1. Issuer and Hovnanian to Furnish Trustee Information
as to Names and Addresses of Securityholders.......21
SECTION 4.2. Preservation and Disclosure of Securityholders Lists.22
SECTION 4.3. Reports by the Issuer and Hovnanian. The Issuer
and Hovnanian covenant:............................23
SECTION 4.4. Reports by the Trustee...............................24
ARTICLE Five REMEDIES OF THE TRUSTEE AND SECURITY HOLDERS ON EVENT
OF DEFAULT...................................................24
SECTION 5.1. Events of Default....................................24
SECTION 5.2. Payment of Securities on Default; Suit Therefor......27
SECTION 5.3. Application of Moneys Collected by Trustee...........28
SECTION 5.4. Proceedings by Securityholders.......................29
SECTION 5.5. Proceedings by Trustee...............................29
SECTION 5.6. Remedies Cumulative and Continuing...................30
SECTION 5.7. Direction of Proceedings; Waiver of Defaults by
Majority of Securityholders........................30
Page
SECTION 5.8. Notice of Defaults...................................30
SECTION 5.9. Undertaking to Pay Costs.............................31
ARTICLE Six CONCERNING THE TRUSTEE...........................................31
SECTION 6.1. Duties and Responsibilities of the Trustee;
During Default; Prior to Default...................31
SECTION 6.2. Certain Rights of the Trustee........................32
SECTION 6.3. Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds Thereof...33
SECTION 6.4. Trustee and Agents May Hold Securities;
Collections, etc...................................33
SECTION 6.5. Moneys Held by Trustee...............................34
SECTION 6.6. Compensation and Indemnification of Trustee and
Its Prior Claim....................................34
SECTION 6.7. Right of Trustee to Rely on Officers'
Certificate, etc...................................34
SECTION 6.8. Qualification of Trustee; Conflicting Interests......35
SECTION 6.9. Persons Eligible for Appointment as Trustee;
Different Trustees for Different Series............35
SECTION 6.10. Resignation and Removal; Appointment of
Successor Trustee.................................35
SECTION 6.11. Acceptance of Appointment by Successor Trustee.......37
SECTION 6.12. Merger, Conversion, Consolidation or Succession
to Business of Trustee............................38
SECTION 6.13. Preferential Collection of Claims Against
the Issuer........................................38
SECTION 6.14. Appointment of Authenticating Agent..................38
ARTICLE Seven CONCERNING THE SECURITYHOLDERS.................................39
SECTION 7.1. Evidence of Action Taken by Securityholders..........39
SECTION 7.2. Proof of Execution of Instruments and of Holding of
Securities.........................................39
SECTION 7.3. Holders to be Treated as Owners......................40
SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding....40
SECTION 7.5. Right of Revocation of Action Taken..................40
SECTION 7.6. Record Date for Consents and Waivers.................41
ARTICLE Eight SUPPLEMENTAL INDENTURES........................................41
SECTION 8.1. Supplemental Indentures Without Consent of
Securityholders....................................41
SECTION 8.2. Supplemental Indentures with Consent of
Securityholders....................................43
SECTION 8.3. Effect of Supplemental Indenture.....................44
SECTION 8.4. Documents to Be Given to Trustee.....................44
SECTION 8.5. Notation on Securities in Respect of Supplemental
Indentures.........................................45
ARTICLE Nine CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR
OTHER DISPOSITION............................................45
SECTION 9.1. Consolidate Permitted, etc., on Certain Terms........45
SECTION 9.2. Successor Corporation to be Substituted..............45
SECTION 9.3. Opinion of Counsel to be Given Trustee...............46
-ii-
Page
ARTICLE Ten LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................46
SECTION 10.1. Applicability of Article............................46
SECTION 10.2. Legal Defeasance And Discharge......................46
SECTION 10.3. Covenant Defeasance.................................47
SECTION 10.4. Conditions To Legal Or Covenant Defeasance..........47
SECTION 10.5. Deposited Money And Government Securities To
Be Held In Trust; Other Miscellaneous Provisions..48
SECTION 10.6. Repayment To Issuer.................................49
SECTION 10.7. Reinstatement.......................................49
SECTION 10.8. Survival............................................49
SECTION 10.9. Satisfaction and Discharge of Indenture.............50
ARTICLE Eleven MISCELLANEOUS PROVISIONS......................................50
SECTION 11.1. Partners, Incorporators, Stockholders, Officers
and Directors of Issuer Exempt from
Individual Liability..............................50
SECTION 11.2. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities.................50
SECTION 11.3. Successors and Assigns of Issuer Bound by
Indenture.........................................50
SECTION 11.4. Notices and Demands on Issuer, Trustee and
Holders of Securities.............................50
SECTION 11.5. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein................51
SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays.....52
SECTION 11.7. Conflict of Any Provision of Indenture with
Trust Indenture Act of 1939.......................52
SECTION 11.8. GOVERNING LAW.......................................52
SECTION 11.9. Counterparts........................................52
SECTION 11.10. Effect of Headings..................................53
ARTICLE Twelve REDEMPTION OF SECURITIES AND SINKING FUNDS....................53
SECTION 12.1. Applicability of Article............................53
SECTION 12.2. Notice of Redemption; Partial Redemptions...........53
SECTION 12.3. Payment of Securities Called for Redemption.........54
SECTION 12.4. Exclusion of Certain Securities from Eligibility
for Selection for Redemption...........55
SECTION 12.5. Mandatory and Optional Sinking Funds................55
ARTICLE Thirteen SUBORDINATION...............................................57
SECTION 13.1. Securities Subordinated to Senior Indebtedness......57
SECTION 13.2. Reliance on Certificate of Liquidating Agent;
Further Evidence as to Ownership of Senior
Indebtedness......................................60
SECTION 13.3. Payment Permitted If No Default.....................60
SECTION 13.4. Disputes with Holders of Certain Senior
Indebtedness......................................60
SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition...61
SECTION 13.6. Trustee to Effectuate Subordination.................61
-iii-
Page
SECTION 13.7. Rights of Trustee as Holder of Senior Indebtedness..61
SECTION 13.8. Article Applicable to Paying Agents.................62
SECTION 13.9. Subordination Rights Not Impaired by Acts or
Omissions of the Issuer or Holders of Senior
Indebtedness......................................62
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior
Indebtedness......................................62
ARTICLE Fourteen SUBORDINATED GUARANTEE......................................62
SECTION 14.1. Applicability of Article............................62
SECTION 14.2. Guarantee...........................................62
SECTION 14.3. Guarantee Subordinated to Senior Debt of the
Guarantor.........................................64
SECTION 14.4. Guarantors Not to Make Payments With Respect to
Securities in Certain Circumstances...............65
SECTION 14.5. Guarantee Subordinated to Prior Payment of All
Senior Debt of a Guarantor on Dissolution,
Winding Up, Liquidation or Reorganization of the
Guarantor.........................................67
SECTION 14.6. Holders to be Subrogated to Rights of Holders of
Senior Debt of each Guarantor.....................68
SECTION 14.7. Obligations of Each Guarantor Unconditional.........69
SECTION 14.8. Trustee Entitled to Assume Payments Not
Prohibited in Absence of Notice...................69
SECTION 14.9. Application by Trustee of Monies Deposited with It..70
SECTION 14.10. Subordination Rights Not Impaired by Acts or
Omissions of a Guarantor or Holders of Senior
Debt of such Guarantor............................70
SECTION 14.11. Holders Authorize Trustee to Effectuate
Subordination of Securities.......................71
SECTION 14.12. Right of Trustee to Hold Senior Debt of a
Guarantor.........................................71
SECTION 14.13. Trustee Not Fiduciary for Holders of Senior Debt
of a Guarantor....................................71
SECTION 14.14. Article 14 Not To Prevent Events of Default........71
SECTION 14.15. Execution and Delivery of Guarantee................72
SECTION 14.16. Subordination of Indebtedness Owed by the
Company to a Guarantor............................72
SECTION 14.17. Officers' Certificate..............................72
-iv-
FORM OF SUBORDINATED INDENTURE
SUBORDINATED INDENTURE, dated as of ____ ___, 2001 among K.
Hovnanian Enterprises, Inc., a New Jersey corporation (the "Issuer"),
Hovnanian Enterprises, Inc., a Delaware Corporation ("Hovnanian"), Subsidiary
Guarantors of Hovnanian and FIRST UNION NATIONAL BANK, as trustee (the
"Trustee").
RECITALS OF THE ISSUER:
WHEREAS, the Issuer has duly authorized the issuance from time to
time of its unsecured subordinated debentures, notes or other evidences of
indebtedness to be issued in one or more series (the "Securities") up to such
principal amount or amounts as may from time to time be authorized in
accordance with the terms of this Indenture; and
WHEREAS, the Issuer has duly authorized the execution and delivery
of this Indenture to provide, among other things, for the authentication,
delivery and administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been undertaken and
completed.
RECITALS OF GUARANTORS:
WHEREAS, each Guarantor desires to make the Guarantees provided for
herein; and
WHEREAS, all things necessary to make this Indenture a valid
agreement of each of the Guarantors, in accordance with its terms, have been
done and the Guarantor will do all things necessary to make the Guarantees,
when executed by each of the Guarantors and endorsed on the Securities
authenticated and delivered hereunder, the valid obligations of each Guarantor
as hereinafter provided.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
series thereof, as follows:
ARTICLE ONE
DEFINITIONS
For all purposes of this Indenture and of any indenture supplemental
hereto the following terms shall have the respective meanings specified in
this Section 1.1 (except as otherwise expressly provided herein or in any
indenture supplemental hereto or unless the context otherwise clearly
requires). All other terms used in this Indenture that are defined in the
Trust Indenture Act of 1939, including terms defined therein by reference to
the Securities Act of 1933, as amended (the "Securities Act"), shall have the
meanings assigned to such terms in said Trust Indenture Act of 1939 and in the
Securities Act as in force at the date of this Indenture
(except as otherwise expressly provided herein or in any indenture
supplemental hereto or unless the context otherwise clearly requires).
All accounting terms used herein and not expressly defined shall
have the meanings assigned to such terms in accordance with generally accepted
accounting principles, and the term "generally accepted accounting principles"
means such accounting principles as are generally accepted on the date of this
Indenture.
The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. The expressions "date of this
Indenture", "date hereof", "date as of which this Indenture is dated" and
"date of execution and delivery of this Indenture" and other expressions of
similar import refer to the effective date of the original execution and
delivery of this Indenture, viz. as of _____________________.
The terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" shall have the meaning set forth in Section
6.14.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 United
Stated Code " 101 et seq., or any successor statute thereto.
"Board of Directors" means when used with reference to the Issuer or
Hovnanian, as the case may be, the board of directors or any duly authorized
committee of that board or any director or directors and/or officer or
officers to whom that board or committee shall have duly delegated its
authority.
"Board Resolution" means (1) one or more resolutions, certified by
the secretary or an assistant secretary of the Issuer or Hovnanian, as
applicable, to have been duly adopted or consented to by the Board of
Directors of the Issuer or Hovnanian, as applicable, and to be in full force
and effect, or (2) a certificate signed by the director or directors and/or
officer or officers to whom the Board of Directors or any duly authorized
committee of that Board shall have duly delegated its authority, in each case
delivered to the Trustee for the Securities of any series.
"Business Day" means, with respect to any Security, unless otherwise
specified in a Board Resolution and an Officers' Certificate with respect to a
particular series of Securities, a day that (a) in the Place of Payment (or in
any of the Places of Payment, if more than one) in which amounts are payable,
as specified in the form of such Security, and (b) in the city in which the
Corporate Trust Office is located, is not a day on which banking institutions
are authorized or required by law or regulation to close.
-2-
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
as amended, or, if at any time after the execution and delivery of this
Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act of 1939, then the body performing
such duties on such date.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets included on the most recent consolidated balance sheet of the Issuer
and its Restricted Subsidiaries, less applicable reserves and other properly
deductible items and after deducting therefrom (a) all current liabilities and
(b) all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles, all in accordance with generally
accepted accounting principles consistently applied.
"Corporate Trust Office" means the office of the Trustee of a series
of Securities at which the trust created by this Indenture shall, at any
particular time, be principally administered, which office is, at the date as
of which this Indenture is dated, located at [address].
"Covenant Defeasance" has the meaning set forth in Section 10.3.
"Covenant Defeasance" has the meaning set forth in Section 10.3.
"Depositary" means, with respect to the Securities of any series
issuable or issued in the form of one or more Global Securities, the Person
designated as Depositary by the Issuer pursuant to Section 2.3 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or
include each Person who is then a Depositary hereunder, and, if at any time
there is more than one such Person, "Depositary" as used with respect to the
Securities of any such series shall mean the Depositary with respect to the
Global Securities of such series.
"Dollars" and the sign "$" means the coin and currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
"Eligible Guarantors" means Hovnanian and each of the other entities
listed on Exhibit B hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Event of Default" means any event or condition specified as such in
Section 5.1.
"Global Security" means a Security evidencing all or a part of a
series of Securities issued to the Depositary for such series in accordance
with Section 2.3 and bearing the legend prescribed in Section 2.4.
"Guarantee" has the meaning specified in Section 14.2.
"Guarantor" has the meaning specified in Section 2.3.
-3-
"Holder", "Holder of Securities", "Securityholder" or other similar
terms mean, in the case of any Security, the Person in whose name such
Security is registered in the security register kept by the Issuer for that
purpose in accordance with the terms hereof.
"Hovnanian" means Hovnanian Enterprises, Inc., a Delaware
corporation.
"Indebtedness" with respect to any Person, means, without
duplication:
(a) (i) the principal of and premium, if any, and interest, if
any, on indebtedness for money borrowed of such Person, indebtedness
of such Person evidenced by bonds, notes, debentures or similar
obligations, and any guaranty by such Person of any indebtedness for
money borrowed or indebtedness evidenced by bonds, notes, debentures
or similar obligations of any other Person, whether any such
indebtedness or guaranty is outstanding on the date of this
Indenture or is thereafter created, assumed or incurred, (ii)
obligations of such Person for the reimbursement of any obligor on
any letter of credit, banker's acceptance or similar credit
transaction; (iii) the principal of and premium, if any, and
interest, if any, on indebtedness incurred, assumed or guaranteed by
such Person in connection with the acquisition by it or any of its
subsidiaries of any other businesses, properties or other assets;
(iv) lease obligations which such Person capitalized in accordance
with Statement of Financial Accounting Standards No. 13 promulgated
by the Financial Accounting Standards Board or such other generally
accepted accounting principles as may be from time to time in
effect; (v) any indebtedness of such Person representing the balance
deferred and unpaid of the purchase price of any property or
interest therein (except any such balance that constitutes an
accrued expense or trade payable) and any guaranty, endorsement or
other contingent obligation of such Person in respect of any
indebtedness of another that is outstanding on the date of this
Indenture or is thereafter created, assumed or incurred by such
Person; and (vi) obligations of such Person under interest rate,
commodity or currency swaps, caps, collars, options and similar
arrangements; and
(b) any amendments, modifications, refundings, renewals or
extensions of any indebtedness or obligation described as
Indebtedness in clause (a) above.
"Indenture" means this instrument as originally executed and
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, including, for all purposes of this instrument and any
such supplement, the provisions of the Trust Indenture Act of 1939 that are
deemed to be a part of and govern this instrument and any such supplement,
respectively, and shall include the forms and terms of particular series of
Securities established as contemplated hereunder.
"interest" means, when used with respect to non-interest bearing
Securities (including, without limitation, any Original Issue Discount
Security that by its terms bears interest only after maturity or upon default
in any other payment due on such Security), interest payable after maturity
(whether at stated maturity, upon acceleration or redemption or otherwise)
-4-
or after the date, if any, on which the Issuer becomes obligated to acquire a
Security, whether upon conversion, by purchase or otherwise.
"Issuer" means K. Hovnanian Enterprises, Inc., a New Jersey
corporation, and, subject to Article Nine, its successors and assigns.
"Issuer Order" means a written statement, request or order of the
Issuer which is signed in its name by the chairman of the Board of Directors,
the president or any vice president of the Issuer, and delivered to the
Trustee.
"Legal Defeasance" has the meaning specified in Section 10.2.
"Officers' Certificate", when used with respect to the Issuer or
Hovnanian, means a certificate signed by the chairman of the Board of
Directors, the president, or any vice president and by the treasurer, any
assistant treasurer, the controller, any assistant controller, the secretary
or any assistant secretary of the Issuer or Hovnanian, as the case may be.
Each such certificate shall include the statements provided for in Section
11.5 if and to the extent required by the provisions of such Section 11.5. One
of the officers signing an Officers' Certificate given pursuant to Section 4.3
shall be the principal executive, financial or accounting officer of the
Issuer or Hovnanian, as the case may be.
"Opinion of Counsel" means an opinion in writing signed by the chief
counsel of the Issuer or by such other legal counsel who may be an employee of
or counsel to the Issuer or Hovnanian and who shall be reasonably satisfactory
to the Trustee. Each such opinion shall include the statements provided for in
Section 11.5, if and to the extent required by the provisions of such Section
11.5.
"original issue date" of any Security (or portion thereof) means the
earlier of (a) the date of such Security or (b) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly)
on registration of transfer, exchange or substitution.
"original issue discount" of any debt security, including any
Original Issue Discount Security, means the difference between the principal
amount of such debt security and the initial issue price of such debt security
(as set forth in the case of an Original Issue Discount Security on the face
of such Security).
"Original Issue Discount Security" means any Security that provides
for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the maturity thereof pursuant to Article
Five.
"Outstanding" when used with reference to Securities, shall, subject
to the provisions of Section 7.4, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
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(b) Securities (other than Securities of any series as to which the
provisions of Article Ten hereof shall not be applicable), or portions
thereof, for the payment or redemption of which moneys or U.S. Government
Obligations (as provided for in Section 10.1) in the necessary amount
shall have been deposited in trust with the Trustee or with any paying
agent (other than the Issuer) or shall have been set aside, segregated
and held in trust by the Issuer for the Holders of such Securities (if
the Issuer shall act as its own paying agent), provided that, if such
Securities, or portions thereof, are to be redeemed prior to the maturity
thereof, notice of such redemption shall have been given as herein
provided, or provision satisfactory to the Trustee shall have been made
for giving such notice; and
(c) Securities which shall have been paid or in substitution for
which other Securities shall have been authenticated and delivered
pursuant to the terms of Section 2.9 (except with respect to any such
Security as to which proof satisfactory to the Trustee is presented that
such Security is held by a Person in whose hands such Security is a
legal, valid and binding obligation of the Issuer).
In determining whether the Holders of the requisite aggregate
principal amount of Outstanding Securities of any or all series have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder, the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding for such purposes shall be the portion of
the principal amount thereof that would be due and payable as of the date of
such determination (as certified by the Issuer to the Trustee) upon a
declaration of acceleration of the maturity thereof pursuant to Article Five.
"Periodic Offering" means an offering of Securities of a series from
time to time, the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the stated
maturity or maturities thereof and the redemption provisions, if any, with
respect thereto, are to be determined by the Issuer or its agents upon the
issuance of such Securities.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of and interest, if any,
on the Securities of such series are payable as determined in accordance with
Section 2.3.
"principal" of a debt security, including any Security, means the
amount (including, without limitation, if and to the extent applicable, any
premium and, in the case of an Original Issue Discount Security, any accrued
original issue discount, but excluding interest) that is payable with respect
to such debt security as of any date and for any purpose (including, without
limitation, in connection with any sinking fund, if any, upon any redemption
at the option of the Issuer, upon any purchase or exchange at the option of
the Issuer or the holder of such debt security and upon any acceleration of
the maturity of such debt security).
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"principal amount" of a debt security, including any Security, means
the principal amount as set forth on the face of such debt security.
"record date" shall have the meaning set forth in Section 2.7.
"Responsible Officer", when used with respect to the Trustee of a
series of Securities, means any officer of the Trustee with direct
responsibility for the administration of the trust created by this Indenture.
"Restricted Subsidiary" means (a) any Subsidiary of the Issuer other
than an Unrestricted Subsidiary, and (b) any Subsidiary of the Issuer which
was an Unrestricted Subsidiary but which, subsequent to the date hereof, is
designated by the Issuer (by Board Resolution) to be a Restricted Subsidiary;
provided, however, that the Issuer may not designate any such Subsidiary to be
a Restricted Subsidiary if the Issuer would thereby breach any covenant or
agreement herein contained (on the assumptions that any outstanding
Indebtedness of such Subsidiary was incurred at the time of such designation).
"Securities Act" shall have the meaning set forth in Section 1.1.
"Security" or "Securities"has the meaning stated in the first
recital of this Indenture and more particularly means any Securities
authenticated and delivered under this Indenture; provided, however that if at
any time there is more than one Person acting as Trustee under this
Instrument, "Securities" with respect to the Indenture as to which such Person
is Trustee shall have the meaning stated in the first recital of this
instrument and shall more particularly mean Securities authenticated and
delivered under this instrument, exclusive, however, of Securities of any
series as to which such Person is not Trustee.
"Senior Indebtedness" means Indebtedness of the Issuer outstanding
at any time (other than the Indebtedness evidenced by the Securities of any
series) except (a) any Indebtedness as to which, by the terms of the
instrument creating or evidencing such Indebtedness, it is provided that such
Indebtedness is not senior or prior in right of payment to the Securities or
is pari passu or subordinate by its terms in right of payment to the
Securities, (b) renewals, extensions and modifications of any such
Indebtedness, (c) any Indebtedness of the Issuer to a wholly-owned Subsidiary
of the Issuer, (d) interest accruing after the filing of a petition initiating
any proceeding referred to in Sections 5.1(e) and 5.1(f) unless such interest
is an allowed claim enforceable against the Issuer in a proceeding under
federal or state bankruptcy laws and (e) trade payables.
"Significant Subsidiary" means any Subsidiary which is a
"significant subsidiary" of the Issuer within the meaning of Rule 1.02(w) of
Regulation S-X promulgated by the Commission as in effect on the date of this
Indenture.
"Subsidiary" of any specified Person means any corporation of which
such Person, or such Person and one or more Subsidiaries of such Person, or
any one or more Subsidiaries of such Person, directly or indirectly own voting
securities entitling any one or more of such Persons and its Subsidiaries to
elect a majority of the directors, either at all times or, so long as there is
no default or contingency which permits the holders of any other class or
classes of securities to vote for the election of one or more directors.
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"Trust Indenture Act of 1939" (except as otherwise provided in
Sections 8.1 and 8.2) means the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990, as in force at the date as of which this
Indenture is originally executed.
"Trustee" means the Person identified as "Trustee" in the first
paragraph hereof and, subject to the provisions of Article Six, shall also
include any successor trustee. "Trustee" shall also mean or include each
Person who is then a trustee hereunder and, if at any time there is more than
one such Person, "Trustee" as used with respect to the Securities of any
series shall mean the trustee with respect to the Securities of such series.
"Unrestricted Subsidiary" means (a) any Subsidiary of the Issuer
acquired or organized after the date hereof, provided, however, that such
Subsidiary of the Issuer shall not be a successor, directly or indirectly, to
any Restricted Subsidiary, and (b) any Subsidiary of the Issuer substantially
all the assets of which consist of stock or other securities of a Subsidiary
or Subsidiaries of the Issuer of the character described in clause (a) of this
paragraph, unless and until such Subsidiary shall have been designated to be a
Restricted Subsidiary pursuant to clause (b) of the definition of "Restricted
Subsidiary".
"U.S. Government Obligations" shall have the meaning set forth in
Section 10.1(B).
"vice president," when used with respect to the Issuer or the
Trustee, means any vice president, regardless of whether designated by a
number or a word or words added before or after the title "vice president."
"Yield to Maturity" means the yield to maturity on a series of
Securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with generally accepted financial practice or as
otherwise provided in the terms of such series of Securities.
ARTICLE TWO
SECURITIES
SECTION 2.1. Forms Generally. The Securities of each series shall be
substantially in such form (not inconsistent with this Indenture) as shall be
established by or pursuant to one or more Board Resolutions (as set forth in a
Board Resolution or, to the extent established pursuant to rather than set
forth in a Board Resolution, an Officers' Certificate detailing such
establishment) or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have
imprinted or otherwise reproduced thereon such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may
be required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities as evidenced by their
execution of such Securities.
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SECTION 2.2. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be
substantially as follows:
This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
________________________, as Trustee
By_______________________________
Authorized Signatory
If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Securities of such series shall
bear, in addition to the Trustee's certificate of authentication, an alternate
Certificate of Authentication which shall be substantially as follows:
This is one of the Securities of the series designated herein
referred to in the within mentioned Indenture.
________________________, as Trustee
By_______________________________
Authorized Signatory
________________________, as Trustee
By_______________________________
Authorized Signatory
SECTION 2.3. Amount Unlimited Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series and the
Securities of each such series shall rank equally and pari passu with the
Securities of each other series, but all Securities issued hereunder shall be
subordinate and junior in right of payment, to the extent and in the manner
set forth in Article Thirteen, to all Senior Indebtedness of the Issuer. There
shall be established in or pursuant to one or more Board Resolutions (and, to
the extent established pursuant to rather than set forth in a Board
Resolution, in an Officers' Certificate detailing such establishment) or
established in one or more indentures supplemental hereto, prior to the
initial issuance of Securities of any series:
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(1) the designation of the Securities of the series, which shall
distinguish the Securities of such series from the Securities of all
other series;
(2) any limit upon the aggregate principal amount of the Securities
of the series that may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 2.8, 2.9, 2.11, 8.5 or
12.3);
(3) the date or dates on which the principal of the Securities of
the series is payable;
(4) the rate or rates at which the Securities of the series shall
bear interest, if any, the date or dates from which any such interest
shall accrue, on which any such interest shall be payable and on which a
record shall be taken for the determination of Holders to whom any such
interest is payable or the method by which such rate or rates or date or
dates shall be determined or both;
(5) the place or places where and the manner in which the principal
of, premium, if any, and interest, if any, on Securities of the series
shall be payable (if other than as provided in Section 3.2) and the
office or agency for the Securities of the series maintained by the
Issuer pursuant to Section 3.2;
(6) the right, if any, of the Issuer to redeem, purchase or repay
Securities of the series, in whole or in part, at its option and the
period or periods within which, the price or prices (or the method by
which such price or prices shall be determined or both) at which, the
form or method of payment therefor if other than in cash and any terms
and conditions upon which and the manner in which (if different from the
provisions of Article Twelve) Securities of the series may be so
redeemed, purchased or repaid, in whole or in part pursuant to any
sinking fund or otherwise;
(7) the obligation, if any, of the Issuer to redeem, purchase or
repay Securities of the series in whole or in part pursuant to any
mandatory redemption, sinking fund or analogous provisions or at the
option of a Holder thereof and the period or periods within which the
price or prices (or the method by which such price or prices shall be
determined or both) at which, the form or method of payment therefor if
other than in cash and any terms and conditions upon which and the manner
in which (if different from the provisions of Article Twelve) Securities
of the series shall be redeemed, purchased or repaid, in whole or in
part, pursuant to such obligation;
(8) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(9) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
acceleration of the maturity thereof;
(10) whether Securities of the series will be issuable as Global
Securities;
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(11) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions, the
form and terms of such certificates, documents or conditions;
(12) any trustees, depositaries, authenticating or paying agents,
transfer agents or registrars or any other agents with respect to the
Securities of such series;
(13) any deleted, modified or additional events of default or
remedies or any deleted, modified or additional covenants with respect to
the Securities of such series;
(14) whether the provisions of Article Ten will not be applicable to
Securities of such series;
(15) any provision relating to the issuance of Securities of such
series at an original issue discount (including, without limitation, the
issue price thereof, the rate or rates at which such original issue
discount shall accrete, if any, and the date or dates from or to which or
period or periods during which such original issue discount shall accrete
at such rate or rates);
(16) if other than Dollars, the foreign currency in which payment of
the principal of, premium, if any, and interest, if any, on the
Securities of such series shall be payable;
(17) if other than First Union National Bank is to act as Trustee
for the Securities of such series, the name and Corporate Trust Office of
such Trustee;
(18) if the amounts of payments of principal of, premium, if any,
and interest, if any, on the Securities of such series are to be
determined with reference to an index, the manner in which such amounts
shall be determined;
(19) the terms for conversion or exchange, if any, with respect to
the Securities of such series;
(20) which, if any, of the Eligible Guarantors, in addition to
Hovnanian, shall guarantee the Securities on the terms set forth in
Article Fourteen (Hovnanian, together with each of the other Eligible
Guarantors that guarantee the Securities set forth in Article Fourteen,
if any, a "Guarantor"); and
(21) any other terms of the series.
All Securities of any one series shall be substantially identical,
except as to denomination and except as may otherwise be provided by or
pursuant to the Board Resolution or Officers' Certificate referred to above or
as set forth in any such indenture supplemental hereto. All Securities of any
one series need not be issued at the same time and may be issued from time to
time, consistent with the terms of this Indenture, if so provided by or
pursuant to such Board Resolution, such Officers' Certificate or in any such
indenture supplemental hereto.
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Any such Board Resolution or Officers' Certificate referred to above
with respect to Securities of any series filed with the Trustee on or before
the initial issuance of the Securities of such series shall be incorporated
herein by reference with respect to Securities of such series and shall
thereafter be deemed to be a part of the Indenture for all purposes relating
to Securities of such series as fully as if such Board Resolution or Officers'
Certificate were set forth herein in full.
SECTION 2.4. Authentication and Delivery of Securities. The Issuer
may deliver Securities of any series executed by the Issuer to the Trustee for
authentication together with the applicable documents referred to below in
this Section 2.4, and the Trustee shall thereupon authenticate and deliver
such Securities to, or upon the order of the Issuer (contained in the Issuer
Order referred to below in this Section 2.4) or pursuant to such procedures
acceptable to the Trustee and to such recipients as may be specified from time
to time by an Issuer Order. The maturity date, original issue date, interest
rate, if any, and any other terms of the Securities of such series shall be
determined by or pursuant to such Issuer Order and procedures. If provided for
in such procedures and agreed to by the Trustee, such Issuer Order may
authorize authentication and delivery pursuant to oral instructions from the
Issuer or its duly authorized agent, which instructions shall be promptly
confirmed in writing. In authenticating the Securities of such series and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive (in the case of
subparagraphs (2), (3) and (4) below only at or before the time of the first
request of the Issuer to the Trustee to authenticate Securities of such
series) and (subject to Section 6.1) shall be fully protected in relying upon,
unless and until such documents have been superseded or revoked:
(1) an Issuer Order requesting such authentication and setting forth
delivery instructions provided that, with respect to Securities of a
series subject to a Periodic Offering, (a) such Issuer Order may be
delivered by the Issuer to the Trustee prior to the delivery to the
Trustee of such Securities for authentication and delivery, (b) the
Trustee shall authenticate and deliver Securities of such series for
original issue from time to time, in an aggregate principal amount not
exceeding the aggregate principal amount established for such series,
pursuant to an Issuer Order or pursuant to procedures acceptable to the
Trustee as may be specified from time to time by an Issuer Order, (c) the
maturity date or dates, original issue date or dates, interest rate or
rates, if any, and any other terms of Securities of such series shall be
determined by an Issuer Order or pursuant to such procedures, (d) if
provided for in such procedures, such Issuer Order may authorize
authentication and delivery pursuant to oral or electronic instructions
from the Issuer or its duly authorized agent or agents, which oral
instructions shall be promptly confirmed in writing and (e) after the
original issuance of the first Security of such series to be issued, any
separate request by the Issuer that the Trustee authenticate Securities
of such series for original issuance will be deemed to be a certification
by the Issuer that it is in compliance with all conditions precedent
provided for in this Indenture relating to the authentication and
delivery of such Securities;
(2) the Board Resolution, Officers' Certificate or executed
supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant
to which the forms and terms of the Securities of such series were
established;
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(3) an Officers' Certificate setting forth the form or forms and
terms of the Securities stating that the form or forms and terms of the
Securities have been established pursuant to Sections 2.1 and 2.3 and
comply with this Indenture and covering such other matters as the Trustee
may reasonably request; and
(4) at the option of the Issuer, either an Opinion of Counsel, or a
letter from legal counsel addressed to the Trustee permitting it to rely
on an Opinion of Counsel, substantially to the effect that:
(a) the form or forms of the Securities of such series have been
duly authorized and established in conformity with the provisions of this
Indenture;
(b) in the case of an underwritten offering, the terms of the
Securities of such series have been duly authorized and established in
conformity with the provisions of this Indenture, and, in the case of an
offering that is not underwritten, certain terms of the Securities of
such series have been established pursuant to a Board Resolution, an
Officers' Certificate or a supplemental indenture in accordance with this
Indenture, and when such other terms as are to be established pursuant to
procedures set forth in an Issuer Order shall have been established, all
such terms will have been duly authorized by the Issuer and will have
been established in conformity with the provisions of this Indenture;
(c) when the Securities of such series have been executed by the
Issuer and the Securities of such series have been authenticated by the
Trustee in accordance with the provisions of this Indenture and delivered
to and duly paid for by the purchasers thereof, they will have been duly
issued under this Indenture and will be valid and legally binding
obligations of the Issuer, enforceable in accordance with their
respective terms, and will be entitled to the benefits of this Indenture;
and
(d) the execution and delivery by the Issuer of, and the performance
by the Issuer of its obligations under, the Securities of such series
will not contravene any provision of applicable law or the articles of
incorporation or bylaws of the Issuer or any agreement or other
instrument binding upon the Issuer or any of its Subsidiaries that is
material to the Issuer and its Subsidiaries, considered as one
enterprise, or, to such counsel's knowledge after the inquiry indicated
therein (which shall be reasonable), any judgment, order or decree of any
governmental agency or any court having jurisdiction over the Issuer or
any Subsidiary of the Issuer, and no consent, approval or authorization
of any governmental body or agency is required for the performance by the
Issuer of its obligations under the Securities, except such as are
specified and have been obtained and such as may be required by the
securities or blue sky laws of the various states in connection with the
offer and sale of the Securities.
In addition, if the authentication and delivery relates to a new
series of Securities created by an indenture supplemental hereto, such Opinion
of Counsel shall also state that all laws and requirements with respect to the
form and execution by the Issuer of the supplemental indenture with respect to
the series of Securities have been complied with, the Issuer has corporate
power to execute and deliver any such supplemental indenture and has taken all
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necessary corporate action for those purposes and any such supplemental
indenture has been executed and delivered and constitutes the legal, valid and
binding obligation of the Issuer enforceable in accordance with its terms.
In rendering such opinions, such counsel may qualify any opinions as
to enforceability by stating that such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium and other
similar laws affecting the rights and remedies of creditors and is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the State of New
Jersey and the federal law of the United States, upon opinions of other
counsel (copies of which shall be delivered to the Trustee), who shall be
counsel reasonably satisfactory to the Trustee, in which case the opinion
shall state that such counsel believes that both such counsel and the Trustee
are entitled so to rely. Such counsel may also state that, insofar as such
opinion involves factual matters, such counsel has relied, to the extent such
counsel deems proper, upon certificates of officers of the Issuer and its
Subsidiaries and certificates of public officials.
The Trustee shall have the right to decline to authenticate and
deliver any Securities of any series under this Section 2.4 if the Trustee,
being advised by counsel, determines that such action may not lawfully be
taken by the Issuer, or if the Trustee in good faith by its board of directors
or board of trustees, executive committee or a trust committee of directors or
trustees or Responsible Officers shall determine that such action would expose
the Trustee to personal liability to existing Holders or would adversely
affect the Trustee's own rights, duties or immunities under the Securities,
this Indenture or otherwise.
If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Global
Securities, then the Issuer shall execute and the Trustee shall, in accordance
with this Section 2.4 and the Issuer Order with respect to such series,
authenticate and deliver one or more Global Securities that (i) shall
represent and shall be denominated in an amount equal to the aggregate
principal amount of all of the Securities of such series to be issued in the
form of Global Securities and not yet cancelled, (ii) shall be registered in
the name of the Depositary for such Global Security or Securities or the
nominee of such Depositary, (iii) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary's instructions, and (iv) shall bear
a legend substantially to the following effect: "Unless and until it is
exchanged in whole or in part for Securities in definitive registered form,
this Security may not be transferred except as a whole by the Depositary to
the 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."
Each Depositary designated pursuant to Section 2.3 must, at the time
of its designation and at all times while it serves as Depositary, be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and any other applicable statute or regulation.
Reference is made to Section 14.15 concerning execution and delivery
of the Guarantees.
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SECTION 2.5. Execution of Securities. The Securities shall be signed
on behalf of the Issuer by the chairman of the Board of Directors, the
president, any vice president or the treasurer of the Issuer, under its
corporate seal which may, but need not, be attested by its secretary or one of
its assistant secretaries. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. The seal of the Issuer
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of a seal or any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall
be authenticated and delivered by the Trustee or disposed of by the Issuer,
such Security nevertheless may be authenticated and delivered or disposed of
as though the person who signed such Security had not ceased to be such
officer of the Issuer; and any Security may be signed on behalf of the Issuer
by such persons as, at the actual date of the execution of such Security,
shall be the proper officers of the Issuer, although at the date of the
execution and delivery of this Indenture any such person was not such an
officer.
Reference is made to Section 14.15 concerning execution and delivery
of the Guarantees.
SECTION 2.6. Certificate of Authentication. Only such Securities as
shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by the manual signature of one
of its authorized signatories, or its Authenticating Agent, shall be entitled
to the benefits of this Indenture or be valid or obligatory for any purpose.
The execution of such certificate by the Trustee or its Authenticating Agent
upon any Security executed by the Issuer shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture. Each
reference in this Indenture to authentication by the Trustee includes
authentication by an agent appointed pursuant to Section 6.14.
Reference is made to Section 14.15 concerning execution and delivery
of the Guarantees.
SECTION 2.7. Denomination and Date of Securities; Payments of
Interest. The Securities of each series shall be issuable in registered form
in denominations established as contemplated by Section 2.3 or, with respect
to the Securities of any series, if not so established, in denominations of
$1,000 and any integral multiple thereof. The Securities of each series shall
be numbered, lettered or otherwise distinguished in such manner or in
accordance with such plan as the officers of the Issuer executing the same may
determine with the approval of the Trustee, as evidenced by the execution and
authentication thereof.
Each Security shall be dated the date of its authentication. The
Securities of each series shall bear interest, if any, from the date, and such
interest, if any, shall be payable on the dates, established as contemplated
by Section 2.3.
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The Person in whose name any Security of any series is registered at
the close of business on any record date applicable to a particular series
with respect to any interest payment date for such series shall be entitled to
receive the interest, if any, payable on such interest payment date
notwithstanding any transfer or exchange of such Security subsequent to the
record date and prior to such interest payment date, except if and to the
extent the Issuer shall default in the payment of the interest due on such
interest payment date for such series, in which case such defaulted interest
shall be paid to the Persons in whose names Outstanding Securities for such
series are registered (a) at the close of business on a subsequent record date
(which shall be not less than five Business Days prior to the date of payment
of such defaulted interest) established by notice given by mail by or on
behalf of the Issuer to the Holders of Securities not less than 15 days
preceding such subsequent record date or (b) as determined by such other
procedure as is mutually acceptable to the Issuer and the Trustee. The term
"record date" as used with respect to any interest payment date (except a date
for payment of defaulted interest) for the Securities of any series shall mean
the date specified as such in the terms of the Securities of such series
established as contemplated by Section 2.3, or, if no such date is so
established, if such interest payment date is the first day of a calendar
month, the fifteenth day of the next preceding calendar month or, if such
interest payment date is the fifteenth day of a calendar month, the first day
of such calendar month, whether or not such record date is a Business Day.
SECTION 2.8. Registration, Transfer and Exchange. The Issuer will
keep at each office or agency to be maintained for the purpose as provided in
Section 3.2 for each series of Securities a register or registers in which,
subject to such reasonable regulations as it may prescribe, it will provide
for the registration of Securities of each series and the registration of
transfer of Securities of such series. Each such register shall be in written
form in the English language or in any other form capable of being converted
into such form within a reasonable time. At all reasonable times such register
or registers shall be open for inspection and available for copying by the
Trustee.
Upon due presentation for registration of transfer of any Security
of any series at any such office or agency to be maintained for the purpose as
provided in Section 3.2, the Issuer shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or transferees a new
Security or Securities of the same series, maturity date, interest rate, if
any, and original issue date in authorized denominations for a like aggregate
principal amount.
All Securities presented for registration of transfer shall (if so
required by the Issuer or the Trustee) be duly endorsed by, or be accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Issuer and the Trustee duly executed by, the Holder or his attorney duly
authorized in writing.
At the option of the Holder thereof, Securities of any series (other
than a Global Security, except as set forth below) may be exchanged for a
Security or Securities of such series having authorized denominations and an
equal aggregate principal amount, upon surrender of such Securities to be
exchanged at the agency of the Issuer that shall be maintained for such
purpose in accordance with Section 3.2.
The Issuer may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
registration of transfer of
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Securities. No service charge shall be made for any such transaction or for
any exchange of Securities of any series as contemplated by the immediately
preceding paragraph.
The Issuer shall not be required to exchange or register a transfer
of (a) any Securities of any series for a period of 15 days next preceding the
first mailing or publication of notice of redemption of Securities of such
series to be redeemed, (b) any Securities selected, called or being called for
redemption, in whole or in part, except, in the case of any Security to be
redeemed in part, the portion thereof not so to be redeemed or (c) any
Security if the Holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Security in whole or in part, except the portion of
such Security not required to be repurchased.
Notwithstanding any other provision of this Section 2.8, unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, a Global Security representing all or a part of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series
or a nominee of such successor Depositary.
If at any time the Depositary for any Securities of a series
represented by one or more Global Securities notifies the Issuer that it is
unwilling or unable to continue as Depositary for such Securities or if at any
time the Depositary for such Securities shall no longer be eligible under
Section 2.4, the Issuer shall appoint a successor Depositary with respect to
such Securities. If a successor Depositary for such Securities is not
appointed by the Issuer within 90 days after the Issuer receives such notice
or becomes aware of such ineligibility, the Issuer's election pursuant to
Section 2.3 that such Securities be represented by one or more Global
Securities shall no longer be effective and the Issuer shall execute, and the
Trustee, upon receipt of an Issuer Order for the authentication and delivery
of definitive Securities of such series, will authenticate and deliver
Securities of such series in definitive registered form, in any authorized
denominations, in an aggregate principal amount equal to the principal amount
of the Global Security or Securities representing such Securities in exchange
for such Global Security or Securities.
The Issuer may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global
Securities shall no longer be represented by a Global Security or Securities.
In such event, the Issuer shall execute, and the Trustee, upon receipt of an
Issuer Order for the authentication and delivery of definitive Securities of
such series, shall authenticate and deliver, Securities of such series in
definitive registered form, in any authorized denominations, in an aggregate
principal amount equal to the principal amount of the Global Security or
Securities representing such Securities, in exchange for such Global Security
or Securities.
If specified by the Issuer pursuant to Section 2.3 with respect to
Securities represented by a Global Security, the Depositary for such Global
Security may surrender such Global Security in exchange in whole or in part
for Securities of the same series in definitive registered form on such terms
as are acceptable to the Issuer and such Depositary. Thereupon, the Issuer
shall execute, and the Trustee shall authenticate and deliver, without service
charge,
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(i) to the Person specified by such Depositary, a new Security or
Securities of the same series, of any authorized denominations as
requested by such Person, in an aggregate principal amount equal to and
in exchange for such Person's beneficial interest in the Global Security;
and
(ii) to such Depositary a new Global Security in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of
Securities authenticated and delivered pursuant to clause (i) above.
Upon the exchange of a Global Security for Securities in definitive
registered form in authorized denominations, such Global Security shall be
cancelled by the Trustee or an agent of the Trustee. Securities in definitive
registered form issued in exchange for a Global Security pursuant to this
Section 2.8 shall be registered in such names and in such authorized
denominations as the Depositary for such Global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Trustee or the Issuer or an agent of
the Issuer. The Trustee or such agent shall deliver at its office such
Securities to or as directed by the Persons in whose names such Securities are
so registered.
All Securities issued upon any registration of transfer or exchange
of Securities shall be valid and legally binding obligations of the Issuer,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
SECTION 2.9. Mutilated, Defaced, Destroyed, Lost and Stolen
Securities. In case any temporary or definitive Security shall become
mutilated, defaced or be destroyed, lost or stolen, the Issuer in its
discretion may execute, and upon the written request of the Issuer, the
Trustee shall authenticate and deliver a new Security of the same series,
maturity date, interest rate, if any, and original issue date, bearing a
number or other distinguishing symbol not contemporaneously outstanding, in
exchange and substitution for the mutilated or defaced Security, or in lieu of
and in substitution for the Security so destroyed, lost or stolen. In every
case the applicant for a substitute Security shall furnish to the Issuer and
to the Trustee and any agent of the Issuer or the Trustee such security or
indemnity as may be required by the Trustee or the Issuer or any such agent to
indemnify and defend and to save each of the Trustee and the Issuer and any
such agent harmless and, in every case of destruction, loss or theft, evidence
to their satisfaction of the destruction, loss or theft of such Security and
of the ownership thereof and in the case of mutilation or defacement, shall
surrender the Security to the Trustee or such agent.
Upon the issuance of any substitute Security, the Issuer may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee or its agent) connected therewith. In case
any Security which has matured or is about to mature or has been called for
redemption in full shall become mutilated or defaced or be destroyed, lost or
stolen, the Issuer may instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the
case of a mutilated or defaced Security), if the applicant for such payment
shall furnish to the Issuer and to the Trustee and any agent of the
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Issuer or the Trustee such security or indemnity as any of them may require to
hold each of them harmless, and, in every case of destruction, loss or theft,
the applicant shall also furnish to the Issuer and the Trustee and any agent
of the Issuer or the Trustee evidence to the Trustee's satisfaction of the
destruction, loss or theft of such Security and of the ownership thereof.
Every substitute Security of any series issued pursuant to the
provisions of this Section by virtue of the fact that any such Security is
destroyed, lost or stolen shall constitute an additional contractual
obligation of the Issuer, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone and shall be entitled to
all the benefits of (but shall be subject to all the limitations of rights set
forth in) this Indenture equally and proportionately with any and all other
Securities of such series duly authenticated and delivered hereunder. All
Securities shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect
to the replacement or payment of mutilated, defaced, destroyed, lost or stolen
Securities and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments
or other securities without their surrender.
SECTION 2.10. Cancellation of Securities; Disposition Thereof. All
Securities surrendered for payment, redemption, registration of transfer or
exchange, or for credit against any payment in respect of a sinking or
analogous fund, if surrendered to the Issuer or any agent of the Issuer or the
Trustee or any agent of the Trustee, shall be delivered to the Trustee or its
agent for cancellation or, if surrendered to the Trustee, shall be cancelled
by it; and no Securities shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture. The Trustee shall
dispose of all cancelled Securities in accordance with its standard procedures
and shall deliver a certificate of such disposition to the Company. If the
Issuer or its agent shall acquire any of the Securities, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are delivered to the
Trustee or its agent for cancellation.
SECTION 2.11. Temporary Securities. Pending the preparation of
definitive Securities for any series, the Issuer may execute and the Trustee
shall authenticate and deliver temporary Securities for such series (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be
issuable in any authorized denomination, and substantially in the form of the
definitive Securities of such series but with such omissions, insertions and
variations as may be appropriate for temporary Securities, all as may be
determined by the Issuer with the concurrence of the Trustee as evidenced by
the execution and authentication thereof. Temporary Securities may contain
such references to any provisions of this Indenture as may be appropriate.
Every temporary Security shall be executed by the Issuer and be authenticated
by the Trustee upon the same conditions and in substantially the same manner,
and with like effect, as the definitive Securities. Without unreasonable delay
the Issuer shall execute and shall furnish definitive Securities of such
series and thereupon temporary Securities of such series may be surrendered in
exchange therefor without charge at each office or agency to be maintained by
the Issuer for that purpose pursuant to Section 3.2 and the Trustee shall
authenticate and deliver in exchange for such temporary Securities of such
series an equal aggregate principal amount of definitive Securities of the
same series having authorized denominations. Until so exchanged, the temporary
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Securities of any series shall be entitled to the same benefits under this
Indenture as definitive Securities of such series, unless otherwise
established pursuant to Section 2.3.
SECTION 2.12. CUSIP Numbers. The Issuer in issuing the Securities
may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Securities
or as contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Securities, and any
such redemption shall not be affected by any defect in or omission of such
numbers.
ARTICLE THREE
COVENANTS
SECTION 3.1. Payment of Principal and Interest. The Issuer covenants
and agrees that it will duly and punctually pay or cause to be paid the
principal of, premium, if any, and interest, if any, on each of the Securities
at the place, at the respective times and in the manner provided in the
Securities.
SECTION 3.2. Offices for Notices and Payments, etc. So long as any
of the Securities are Outstanding, the Issuer and Hovnanian will maintain in
each Place of Payment, an office or agency where the Securities may be
presented for payment, an office or agency where the Securities may be
presented for registration of transfer and for exchange as provided in this
Indenture, and an office or agency where notices and demands to or upon the
Issuer and Hovnanian in respect of the Securities or of this Indenture may be
served. In case the Issuer shall at any time fail to maintain any such office
or agency, or shall fail to give notice to the Trustee of any change in the
location thereof, presentation may be made and notice and demand may be served
in respect of the Securities or of this Indenture at the Corporate Trust
Office. The Issuer hereby initially designates the Corporate Trust Office for
each such purpose and appoints the Trustee as registrar and paying agent and
as the agent upon whom notices and demands may be served with respect to the
Securities.
SECTION 3.3. No Interest Extension. In order to prevent any
accumulation of claims for interest after maturity thereof, the Issuer will
not directly or indirectly extend or consent to the extension of the time for
the payment of any claim for interest on any of the Securities and will not
directly or indirectly be a party to or approve any such arrangement by the
purchase or funding of said claims or in any other manner; provided, however,
that this Section 3.3 shall not apply in any case where an extension shall be
made pursuant to a plan proposed by the Issuer to the Holders of all
Securities of any series then Outstanding.
SECTION 3.4. Appointments to Fill Vacancies in Trustee's Office. The
Issuer, whenever necessary to avoid or fill a vacancy in the office of the
Trustee, will appoint, in the manner provided in Section 6.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 3.5. Provision as to Paying Agent. (a) If the Issuer shall
appoint a paying agent other than the Trustee, it will cause such paying agent
to execute and deliver to the
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Trustee an instrument in which such paying agent shall agree with the Trustee,
subject to the provisions of this Section 3.5, (1)
(1) that it will hold all sums held by it as such paying agent for
the payment of the principal of or interest, if any, on the Securities
(whether such sums have been paid to it by the Issuer or by any other
obligor on the Securities) in trust for the benefit of the Holders of the
Securities and the Trustee; and
(2) that it will give the Trustee notice of any failure by the
Issuer (or by any other obligor on the Securities) to make any payment of
the principal of, premium, if any, or interest, if any, on the Securities
when the same shall be due and payable; and
(3) that it will, at any time during the continuance of any such
failure, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such paying agent.
(b) If the Issuer shall act as its own paying agent, it will, on or
before each due date of the principal of or interest, if any, on the
Securities, set aside, segregate and hold in trust for the benefit of the
Holders of the Securities a sum sufficient to pay such principal, premium, if
any, or interest, if any, so becoming due and will notify the Trustee of any
failure to take such action and of any failure by the Issuer (or by any other
obligor under the Securities) to make any payment of the principal of,
premium, if any, or interest, if any, on the Securities when the same shall
become due and payable.
(c) Anything in this Section 3.5 to the contrary notwithstanding,
the Issuer may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid
to the Trustee all sums held in trust by it, or any paying agent hereunder, as
required by this Section 3.5, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 3.5 to the contrary notwithstanding,
any agreement of the Trustee or any paying agent to hold sums in trust as
provided in this Section 3.5 is subject to Sections 10.3 and 10.4.
(e) Whenever the Issuer shall have one or more paying agents, it
will, on or before each due date of the principal of or interest, if any, on
any Securities, deposit with a paying agent a sum sufficient to pay the
principal, premium, if any, or interest, if any, so becoming due, such sum to
be held in trust for the benefit of the Persons entitled to such principal,
premium, if any, or interest, if any, and (unless such paying agent is the
Trustee) the Issuer will promptly notify the Trustee of its action or failure
so to act.
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER, HOVNANIAN AND THE TRUSTEE
SECTION 4.1. Issuer and Hovnanian to Furnish Trustee Information as
to Names and Addresses of Securityholders. The Issuer and Hovnanian and any
other obligor on the Securities covenant and agree that they will furnish or
cause to be furnished to the Trustee a
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list in such form as the Trustee may reasonably require of the names and
addresses of the Holders of the Securities of each series:
(a) semiannually and not more than 15 days after each January 1 and
July 1, and
(b) at such other times as the Trustee may request in writing,
within 15 days after receipt by the Issuer of any such request,
provided that if and so long as the Trustee shall be the registrar for such
series, such list shall not be required to be furnished.
SECTION 4.2. Preservation and Disclosure of Securityholders Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders of
each series of Securities (i) contained in the most recent list furnished to
it as provided in Section 4.1, and (ii) received by it in the capacity of
registrar or paying agent for such series, if so acting. The Trustee may
destroy any list furnished to it as provided in Section 4.1 upon receipt of a
new list so furnished.
(b) In case three or more Holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to
the Trustee reasonable proof that each such applicant has owned a Security for
a period of at least six months preceding the date of such application, and
such application states that the applicants desire to communicate with other
Holders of Securities of a particular series (in which case the applicants
must all hold Securities of such series) or with Holders of all Securities
with respect to their rights under this Indenture or under such Securities and
such application is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt of such application, at its
election, either
(i) afford to such applicants access to the information preserved at
the time by the Trustee in accordance with the provisions of subsection
(a) of this Section 4.2, or
(ii) inform such applicants as to the approximate number of Holders
of Securities of such series or of all Securities, as the case may be,
whose names and addresses appear in the information preserved at the time
by the Trustee, in accordance with the provisions of subsection (a) of
this Section 4.2, and as to the approximate cost of mailing to such
Securityholders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford to such applicants access
to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of such series or all Holders of
Securities, as the case may be, whose name and address appears in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2 a copy of the form of proxy
or other communication which is specified in such request, with reasonable
promptness after a tender to the Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Trustee shall mail to such
applicants and file with the Commission, together with a copy of the material
to be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would
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be contrary to the best interests of the Holders of Securities of such series
or of all Securities, as the case may be, or would be in violation of
applicable law. Such written statement shall specify the basis of such
opinion. If the Commission, after opportunity for a hearing upon the
objections specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of an order
sustaining one or more of such objections, the Commission shall find, after
notice and opportunity for hearing, that all the objections so sustained have
been met, and shall enter an order so declaring, the Trustee shall mail copies
of such material to all such Securityholders with reasonable promptness after
the entry of such order and the renewal of such tender; otherwise the Trustee
shall be relieved of any obligation or duty to such applicants respecting
their application.
(c) Each and every Holder of Securities, by receiving and holding
the same, agrees with the Issuer, Hovnanian and the Trustee that neither the
Issuer nor Hovnanian nor the Trustee nor any agent of the Issuer or Hovnanian
or the Trustee shall be held accountable by reason of the disclosure of any
such information as to the names and addresses of the Holders of Securities in
accordance with the provisions of subsection (b) of this Section 4.2,
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material
pursuant to a request made under such subsection (b).
SECTION 4.3. Reports by the Issuer and Hovnanian. The Issuer and
Hovnanian covenant:
(a) to file with the Trustee, within 15 days after the Issuer or
Hovnanian, as the case may be, is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe), if any,
which the Issuer or Hovnanian, as the case may be, may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act; or, if the Issuer or Hovnanian, as the case may be, is not required to
file information, documents or reports pursuant to either of such Sections,
then to file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a debt
security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;
(b) to file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Issuer or Hovnanian, as the case may be, with the conditions and covenants
provided for in this Indenture as may be required from time to time by such
rules and regulations;
(c) to transmit by mail to the Holders of Securities within 30 days
after the filing thereof with the Trustee, in the manner and to the extent
provided in Section 4.4(c), such summaries of any information, documents and
reports required to be filed by the Issuer or Hovnanian, as the case may be,
pursuant to subsections (a) and (b) of this Section 4.3 as may be
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required to be transmitted to such Holders by rules and regulations prescribed
from time to time by the Commission; and
(d) to furnish to the Trustee, not less than annually, a brief
certificate from the principal executive officer, principal financial officer
or principal accounting officer as to his knowledge of the Issuer's or
Hovnanian's, as the case may be, compliance with all conditions and covenants
under this Indenture. For purposes of this subsection (d), such compliance
shall be determined without regard to any period of grace or requirement of
notice provided under this Indenture.
SECTION 4.4. Reports by the Trustee. (a) The Trustee shall transmit
to Holders such reports concerning the Trustee and its actions under this
Indenture as may be required pursuant to the Trust Indenture Act of 1939 at
the times and in the manner provided pursuant thereto. To the extent that any
such report is required by the Trust Indenture Act of 1939 with respect to any
12 month period, such report shall cover the 12 month period ending July 15
and shall be transmitted by the next succeeding September 15.
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be furnished to the Issuer and Hovnanian and
be filed by the Trustee with each stock exchange upon which the Securities of
any applicable series are listed and also with the Commission. The Issuer and
Hovnanian agree to promptly notify the Trustee with respect to any series when
and as the Securities of such series become admitted to trading on any
national securities exchange.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITY HOLDERS
ON EVENT OF DEFAULT
SECTION 5.1. Events of Default. "Event of Default", wherever used
herein with respect to Securities of any series, means any one or more of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Thirteen or otherwise),
unless it is either inapplicable to a particular series or it is specifically
deleted or modified in or pursuant to the Board Resolution or supplemental
indenture establishing such series of Securities or in the form of Security,
for such series:
(a) default in the payment of the principal of or premium, if any,
of the Securities of such series as and when the same shall become due and
payable either at maturity, upon redemption, by declaration or otherwise; or
(b) default in the payment of any installment of interest on any of
the Securities of such series as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; or
(c) default in the payment or satisfaction of any sinking fund or
other purchase obligation with respect to Securities of such series, as and
when such obligation shall become due and payable; or
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(d) failure on the part of the Issuer or a Guarantor duly to observe
or perform any other of the covenants or agreements on the part of the Issuer
in the Securities of such series or in, or a Guarantor of, this Indenture
continued for a period of 90 days after the date on which written notice of
such failure, requiring the Issuer or a Guarantor to remedy the same, shall
have been given by certified or registered mail to the Issuer or a Guarantor
by the Trustee, or to the Issuer or a Guarantor and the Trustee by the Holders
of at least 25% in aggregate principal amount of the Securities of such series
then Outstanding; or
(e) without the consent of the Issuer or Hovnanian a court having
jurisdiction shall enter an order for relief with respect to the Issuer or
Hovnanian or any of their Significant Subsidiaries under any applicable
bankruptcy, insolvency or other similar law of the United States of America,
any state thereof or the District of Columbia, or without the consent of the
Issuer or Hovnanian a court having jurisdiction shall enter a judgment, order
or decree adjudging the Issuer or Hovnanian or any of its Significant
Subsidiaries bankrupt or insolvent, or enter an order for relief for
reorganization, arrangement, adjustment or composition of or in respect of the
Issuer or Hovnanian or any of its Significant Subsidiaries under any
applicable bankruptcy, insolvency or other similar law of the United States of
America, any state thereof or the District of Columbia, and the continuance of
any such judgment, order or decree is unstayed and in effect for a period of
60 consecutive days; or
(f) the Issuer or Hovnanian or any of its Significant Subsidiaries
shall institute proceedings for entry of an order for relief with respect to
the Issuer or Hovnanian or any of its Significant Subsidiaries under any
applicable bankruptcy, insolvency or other similar law of the United States of
America, any state thereof or the District of Columbia, or for an adjudication
of insolvency, or shall consent to the institution of bankruptcy or insolvency
proceedings against it, or shall file a petition seeking, or seek or consent
to reorganization, arrangement, composition or relief under any applicable
bankruptcy, insolvency or other similar law of the United States of America,
any state thereof or the District of Columbia, or shall consent to the filing
of such petition or to the appointment of a receiver, custodian, liquidator,
assignee, trustee, sequestrator or similar official of the Issuer or Hovnanian
or of substantially all of its property, or the Issuer or Hovnanian or any of
its Significant Subsidiaries shall make a general assignment for the benefit
of creditors as recognized under any applicable bankruptcy, insolvency or
other similar law of the United States of America, any state thereof or the
District of Columbia; or
(g) any other Event of Default provided with respect to the
Securities of such series; or
(h) a Guarantee ceases to be in full force and effect (other than in
accordance with the terms of any Guarantee) or a Guarantor denies or
disaffirms its obligations under the Guarantee.
If an Event of Default with respect to Securities of any series then
Outstanding occurs and is continuing, then and in each and every such case,
unless the principal of all of the Securities of such series shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Securities of such series then
Outstanding, by notice in writing to the Issuer (and to the Trustee if given
by Securityholders), may declare the principal (or, if the Securities of such
series are Original Issue Discount
-25-
Securities, such portion of the principal amount as may be specified in the
terms of such series) of all the Securities of such series and the interest,
if any, accrued thereon to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable,
notwithstanding anything to the contrary contained in this Indenture or in the
Securities of such series. This provision, however, is subject to the
condition that, if at any time after the unpaid principal amount (or such
specified amount) of the Securities of such series shall have been so declared
due and payable and before any judgment or decree for the payment of the
moneys due shall have been obtained or entered as hereinafter provided, the
Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all
matured installments of interest, if any, upon all of the Securities of such
series and the principal of any and all Securities of such series which shall
have become due otherwise than by acceleration (with interest on overdue
installments of interest, if any, to the extent that payment of such interest
is enforceable under applicable law and on such principal at the rate borne by
the Securities of such series to the date of such payment or deposit) and the
reasonable compensation, disbursements, expenses and advances of the Trustee
and all other amounts due the Trustee under Section 6.6, and any and all
defaults under this Indenture, other than the nonpayment of such portion of
the principal amount of and accrued interest, if any, on Securities of such
series which shall have become due by acceleration, shall have been cured or
shall have been waived in accordance with Section 5.7 or provision deemed by
the Trustee to be adequate shall have been made therefor, then and in every
such case the Holders of a majority in aggregate principal amount of the
Securities of such series then Outstanding, by written notice to the Issuer
and to the Trustee, may rescind and annul such declaration and its
consequences; but no such rescission and annulment shall extend to or shall
affect any subsequent default, or shall impair any right consequent thereon.
Notwithstanding the previous sentence, no waiver shall be effective against
any Holder for any Event of Default or event which with notice or lapse of
time or both would be an Event of Default with respect to any covenant or
provision which cannot be modified or amended without the consent of the
Holder of each outstanding Security affected thereby, unless all such affected
Holders agree, in writing, to waive such Event of Default or other event.
If any Event of Default with respect to the Issuer specified in
Section 5.1(e) or 5.1(f) occurs, all unpaid principal amount (or, if the
Securities of any series then Outstanding are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of each such series) and accrued interest on all Securities of each
series then Outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act by the Trustee or any
Securityholder.
If the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Issuer, the Trustee and the Securityholders shall be restored respectively to
their several positions and rights hereunder, and all rights, remedies and
powers of the Issuer, the Trustee and the Securityholders shall continue as
though no such proceeding had been taken.
Except with respect to an Event of Default pursuant to Section 5.1
(a), (b) or (c), the Trustee shall not be charged with knowledge of any Event
of Default unless written notice
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thereof shall have been given to a Responsible Officer by the Issuer, a paying
agent or any Securityholder.
SECTION 5.2. Payment of Securities on Default; Suit Therefor. The
Issuer covenants that (a) if default shall be made in the payment of any
installment of interest upon any of the Securities of any series then
Outstanding as and when the same shall become due and payable, and such
default shall have continued for a period of 30 days, or (b) if default shall
be made in the payment of the principal of any of the Securities of such
series as and when the same shall have become due and payable, whether at
maturity of the Securities of such series or upon redemption or by declaration
or otherwise, then, upon demand of the Trustee, the Issuer will pay to the
Trustee, for the benefit of the Holders of the Securities, the whole amount
that then shall have become due and payable on all such Securities of such
series for principal or interest, if any, or both, as the case may be, with
interest upon the overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) upon the overdue installments of
interest, if any, at the rate borne by the Securities of such series; and, in
addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including a reasonable compensation to the
Trustee, its agents, attorneys and counsel, and any expenses or liabilities
incurred by the Trustee hereunder other than through its negligence or bad
faith.
If the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may enforce any
such judgment or final decree against the Issuer or any other obligor on the
Securities of such series and collect in the manner provided by law out of the
property of the Issuer or any other obligor on the Securities of such series,
wherever situated, the moneys adjudged or decreed to be payable.
If there shall be pending proceedings for the bankruptcy or for the
reorganization of the Issuer or any other obligor on the Securities of any
series then Outstanding under any bankruptcy, insolvency or other similar law
now or hereafter in effect, or if a receiver or trustee or similar official
shall have been appointed for the property of the Issuer or such other
obligor, or in the case of any other similar judicial proceedings relative to
the Issuer or other obligor upon the Securities of such series, or to the
creditors or property of the Issuer or such other obligor, the Trustee,
irrespective of whether the principal of the Securities of such series shall
then be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand pursuant to
the provisions of this Section 5.2, shall be entitled and empowered by
intervention in such proceedings or otherwise to file and prove a claim or
claims for the whole amount of principal and interest, if any, owing and
unpaid in respect of the Securities of such series, and, in case of any
judicial proceedings, to 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 and of the Securityholders allowed in such judicial proceedings
relative to the Issuer or any other obligor on the Securities of such series,
its or their creditors, or its or their property, and to collect and receive
any moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses, and any
receiver, assignee or trustee or similar official in bankruptcy or
reorganization is hereby authorized by each of the Securityholders to make
such payments to the Trustee, and, if the
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Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due it for compensation and
expenses or otherwise pursuant to Section 6.6, including counsel fees and
expenses incurred by it up to the date of such distribution. To the extent
that such payment of reasonable compensation, expenses and counsel fees and
expenses out of the estate in any such proceedings shall be denied for any
reason, payment of the same shall be secured by a lien on, and shall be paid
out of, any and all distributions, dividends, moneys, securities and other
property which the Holders of the Securities of such series may be entitled to
receive in such proceedings, whether in liquidation or under any plan of
reorganization or arrangement or otherwise.
All rights of action and of asserting claims under this Indenture,
or under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted
by the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall be for the ratable benefit of the
Holders of the Securities of the series in respect of which such judgment has
been recovered.
SECTION 5.3. Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee pursuant to Section 5.2 with respect to Securities of
any series then Outstanding shall be applied in the order following, at the
date or dates fixed by the Trustee for the distribution of such moneys, upon
presentation of the several Securities of such series, and stamping thereon
the payment, if only partially paid, and upon surrender thereof, if fully
paid:
FIRST: To the payment of costs and expenses of collection and
reasonable compensation to the Trustee, its agents, attorneys and
counsel, and of all other expenses and liabilities incurred, and all
advances made, by the Trustee pursuant to Section 6.6 except as a result
of its negligence or bad faith;
SECOND: If the principal of the Outstanding Securities of such
series shall not have become due and be unpaid, to the payment of
interest, if any, on the Securities of such series, in the order of the
maturity of the installments of such interest, if any, with interest (to
the extent that such interest has been collected by the Trustee) upon the
overdue installments of interest, if any, at the rate borne by the
Securities of such series, such payment to be made ratably to the Persons
entitled thereto;
THIRD: If the principal of the Outstanding Securities of such series
shall have become due, by declaration or otherwise, to the payment of the
whole amount then owing and unpaid upon the Securities of such series for
principal and interest, if any, with interest on the overdue principal
and (to the extent that such interest has been collected by the Trustee)
upon overdue installments of interest, if any, at the rate borne by the
Securities of such series; and in case such moneys shall be insufficient
to pay in full the whole amounts so due and unpaid upon the Securities of
such series, then to the payment of such principal and interest, if any,
without preference or priority of principal over interest or of interest
over principal, or of any installment of interest over any other
installment of interest, or of any Security over any other Security,
ratably to the aggregate of such principal and accrued and unpaid
interest; and
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FOURTH: To the payment of any surplus then remaining to the Issuer,
its successors or assigns, or to whomsoever may be lawfully entitled to
receive the same.
No claim for interest which in any manner at or after maturity shall
have been transferred or pledged separate or apart from the Securities to
which it relates, or which in any manner shall have been kept alive after
maturity by an extension (otherwise than pursuant to an extension made
pursuant to a plan proposed by the Issuer to the Holders of all Securities of
any series then Outstanding), purchase, funding or otherwise by or on behalf
or with the consent or approval of the Issuer shall be entitled, in case of a
default hereunder, to any benefit of this Indenture, except after prior
payment in full of the principal of all Securities of any series then
Outstanding and of all claims for interest not so transferred, pledged, kept
alive, extended, purchased or funded.
SECTION 5.4. Proceedings by Securityholders. No Holder of any
Securities of any series then Outstanding shall have any right by virtue of or
by availing of any provision of this Indenture to institute any suit, action
or proceeding in equity or at law upon or under or with respect to this
Indenture or for the appointment of a receiver or trustee or similar official,
or for any other remedy hereunder, unless such Holder previously shall have
given to the Trustee written notice of default and of the continuance thereof,
as hereinbefore provided, and unless the Holders of not less than 25% in
aggregate principal amount of the Securities of such series then Outstanding
shall have made written request to the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee
for 60 days after its receipt of such notice, request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding, it being understood and intended, and being expressly covenanted
by the Holder of every Security of such series with every other Holder and the
Trustee, that no one or more Holders of Securities of such series shall have
any right in any manner whatever by virtue of or by availing of any provision
of this Indenture or of the Securities to affect, disturb or prejudice the
rights of any other Holder of such Securities of such series, or to obtain or
seek to obtain priority over or preference as to any other such Holder, or to
enforce any right under this Indenture or the Securities, except in the manner
herein provided and for the equal, ratable and common benefit of all Holders
of Securities of such series.
Notwithstanding any other provisions in this Indenture, but subject
to Article Thirteen, the right of any Holder of any Security to receive
payment of the principal of, premium, if any, and interest, if any, on such
Security, on or after the respective due dates expressed in such Security, or
to institute suit for the enforcement of any such payment on or after such
respective dates shall not be impaired or affected without the consent of such
Holder.
SECTION 5.5. Proceedings by Trustee. In case of an Event of Default
hereunder, the Trustee may in its discretion proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any of such rights, either by suit in equity or by action at law or by
proceedings in bankruptcy or otherwise, whether for the specific enforcement
of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this
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Indenture, or to enforce any other legal or equitable right vested in the
Trustee by this Indenture or by law.
SECTION 5.6. Remedies Cumulative and Continuing. All powers and
remedies given by this Article Five to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive
of any thereof or of any other powers and remedies available to the Trustee or
the Securityholders, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture, and no delay or omission of the Trustee or of any Securityholder to
exercise any right or power accruing upon any default occurring and continuing
as aforesaid shall impair any such right or power, or shall be construed to be
a waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 5.4, every power and remedy given by this Article Five
or by law to the Trustee or to the Securityholders may be exercised from time
to time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
SECTION 5.7. Direction of Proceedings; Waiver of Defaults by
Majority of Securityholders. The Holders of a majority in aggregate principal
amount of the Securities of any series then Outstanding shall have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to Securities of such series; provided, however, that
(subject to the provisions of Section 6.1) the Trustee shall have the right to
decline to follow any such direction if the Trustee shall determine upon
advice of counsel that the action or proceeding so directed may not lawfully
be taken or if the Trustee in good faith by its board of directors, its
executive committee, or a trust committee of directors or Responsible Officers
or both shall determine that the action or proceeding so directed would
involve the Trustee in personal liability. The Holders of a majority in
aggregate principal amount of the Securities of any series then Outstanding
may on behalf of the Holders of all of the Securities of such series waive any
past default or Event of Default hereunder and its consequences except a
default in the payment of interest, if any, on, or the principal of, the
Securities of such series. Upon any such waiver the Issuer, the Trustee and
the Holders of the Securities of such series shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon. Whenever any default or Event of Default hereunder shall
have been waived as permitted by this Section 5.7, said default or Event of
Default shall for all purposes of the Securities and this Indenture be deemed
to have been cured and to be not continuing.
SECTION 5.8. Notice of Defaults. The Trustee shall, within 30 days
after the occurrence of a default, with respect to Securities of any series
then Outstanding, mail to all Holders of Securities of such series, as the
names and the addresses of such Holders appear upon the Securities register,
notice of all defaults known to the Trustee with respect to such series,
unless such defaults shall have been cured before the giving of such notice
(the term "defaults" for the purpose of this Section 5.8 being hereby defined
to be the events specified in clauses (a), (b), (c), (d), (e), (f), (g) and
(h) of Section 5.1, not including periods of grace, if any, provided for
therein and irrespective of the giving of the written notice specified in said
clause (d) but in the case of any default of the character specified in said
clause (d) no such notice to Securityholders shall be given until at least 60
days after the giving of written notice thereof to the Issuer pursuant to said
clause (d)); provided, however, that, except in the case of default in the
payment
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of the principal of or interest, if any, on any of the Securities, or in the
payment or satisfaction of any sinking fund or other purchase obligation, the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
or Responsible Officers or both, of the Trustee in good faith determines that
the withholding of such notice is in the best interests of the
Securityholders.
SECTION 5.9. Undertaking to Pay Costs. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the
cost of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 5.9 shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Securityholder, or group of Securityholders, holding in the
aggregate more than 10% in principal amount of the Securities of any series
then Outstanding, or to any suit instituted by any Securityholders for the
enforcement of the payment of the principal of or interest, if any, on any
Security against the Issuer on or after the due date expressed in such
Security.
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1. Duties and Responsibilities of the Trustee; During
Default; Prior to Default. In case an Event of Default with respect to the
Securities of a series has occurred (which has not been cured or waived) the
Trustee shall exercise with respect to such series of Securities 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 man would exercise or use under
the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with respect to
the Securities of any series and after the curing or waiving of all such
Events of Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect to the
Securities of any series shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable except
for the performance of such duties and obligations as are specifically
set forth in this Indenture, and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements,
certificates or opinions furnished to the Trustee
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and conforming to the requirements of this Indenture; but in the case of
any such statements, certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction of
the Holders pursuant to Section 5.7 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that
the repayment of such funds or adequate indemnity against such liability is
not reasonably assured to it.
SECTION 6.2. Certain Rights of the Trustee. Subject to Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction, order or demand of the Issuer mentioned
herein shall be sufficiently evidenced by an Officers' Certificate or Issuer
Order (unless other evidence in respect thereof be herein specifically
prescribed); and any resolution of the Board of Directors may be evidenced to
the Trustee by a Board Resolution;
(c) the Trustee may consult with counsel of its selection and any
advice of such counsel promptly confirmed in writing shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted to be taken by it hereunder in good faith and in reliance thereon
in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of this
Indenture (including, without limitation, pursuant to Section 5.7), unless
such Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred
therein or thereby;
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(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond, debenture, note, coupon,
security, or other paper or document unless requested in writing so to do by
the Holders of not less than a majority in aggregate principal amount of the
Securities of all series affected then Outstanding; provided that, if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such expenses or liabilities as a
condition to proceeding; the reasonable expenses of every such investigation
shall be paid by the Issuer or, if paid by the Trustee or any predecessor
Trustee, shall be repaid by the Issuer upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder;
(h) the Trustee shall not be charged with knowledge of any default
or Event of Default with respect to a series of Securities unless either (i) a
Responsible Officer of the Trustee assigned to the Corporate Trust Office of
the Trustee (or any successor division or department of the Trustee) shall
have actual knowledge of such default or Event of Default or (ii) written
notice of such default or Event of Default shall have been given to the
Trustee by the Issuer or any other obligor on such series of Securities or by
any Holder of Securities of such series; and
(i) the Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture.
SECTION 6.3. Trustee Not Responsible for Recitals, Disposition of
Securities or Application of Proceeds Thereof. The recitals contained herein
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture, of the
Securities or of any prospectus used to sell the Securities. The Trustee shall
not be accountable for the use or application by the Issuer of any of the
Securities or of the proceeds thereof.
SECTION 6.4. Trustee and Agents May Hold Securities; Collections,
etc. The Trustee or any agent of the Issuer or the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee or such agent and,
subject to Sections 6.8 and 6.13, may otherwise deal with the Issuer
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and receive, collect, hold and retain collections from the Issuer with the
same rights it would have if it were not the Trustee or such agent.
SECTION 6.5. Moneys Held by Trustee. Subject to the provisions of
Section 10.4 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the
extent required by mandatory provisions of law. Neither the Trustee nor any
agent of the Issuer or the Trustee shall be under any liability for interest
on any moneys received by it hereunder.
SECTION 6.6. Compensation and Indemnification of Trustee and Its
Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such compensation as shall be
agreed to in writing between the Issuer and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of
an express trust) and the Issuer covenants and agrees to pay or reimburse the
Trustee and each predecessor Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by or on behalf of it in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad
faith. The Issuer also covenants to indemnify the Trustee and each predecessor
Trustee for, and to hold it harmless against, any and all loss, liability,
damage, claim or expense, including taxes (other than taxes based on the
income of the Trustee), incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and its duties hereunder, including the
costs and expenses of defending itself against or investigating any claim or
liability in the premises. The obligations of the Issuer under this Section
6.6 to compensate and indemnify the Trustee and each predecessor Trustee and
to pay or reimburse the Trustee and each predecessor Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture or the
resignation or removal of the Trustee and shall not be subordinate to the
payment of Senior Indebtedness pursuant to Article Thirteen. Such additional
indebtedness shall be a senior claim to that of the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the benefit of the Holders of particular Securities. When the
Trustee incurs expenses or renders services in connection with an Event of
Default specified in Section 5.1 or in connection with Section 5.9 hereof, the
expenses (including the reasonable fees and expenses of its counsel) and the
compensation for the service in connection therewith are intended to
constitute expenses of administration under any bankruptcy law. The provisions
of this Section 6.6 shall survive the resignation or removal of the Trustee
and the termination of this Indenture.
SECTION 6.7. Right of Trustee to Rely on Officers' Certificate, etc.
Subject to Sections 6.1 and 6.2, whenever in the administration of the trusts
of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
certificate, in the absence of negligence or bad faith on the part
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of the Trustee, shall be full warrant to the Trustee for any action taken,
suffered or omitted by it under the provisions of this Indenture upon the
faith thereof.
SECTION 6.8. Qualification of Trustee; Conflicting Interests. This
Indenture shall always have a Trustee who satisfies the requirements of
Section 310(a)(1) of the Trust Indenture Act of 1939. The Trustee shall have a
combined capital and surplus of at least $25,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with
Section 310(b) of the Trust Indenture Act of 1939 regarding disqualification
of a trustee upon acquiring a conflicting interest.
SECTION 6.9. Persons Eligible for Appointment as Trustee; Different
Trustees for Different Series. The Trustee for each series of Securities
hereunder shall at all times be a corporation organized and doing business
under the laws of the United States of America or of any state or the District
of Columbia having a combined capital and surplus of at least $25,000,000, and
which is authorized under such laws to exercise corporate trust powers and is
subject to supervision or examination by federal, state or District of
Columbia authority, or a corporation or other Person permitted to act as
trustee by the Commission. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. No obligor upon the Securities or any Affiliate of
such obligor shall serve as trustee upon the Securities. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of
this Section 6.9, the Trustee shall resign immediately in the manner and with
the effect specified in Section 6.10.
A different Trustee may be appointed by the Issuer for any series of
Securities prior to the issuance of such Securities. If the initial Trustee
for any series of Securities is to be a trustee other than First Union
National Bank, the Issuer and such Trustee shall, prior to the issuance of
such Securities, execute and deliver an indenture supplemental hereto, which
shall provide for the appointment of such Trustee as Trustee for the
Securities of such series and shall add to or change any of the provisions of
this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart
from any trust or trusts hereunder administered by any other such Trustee.
SECTION 6.10. Resignation and Removal; Appointment of Successor
Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign with respect to one or more or all series of Securities by
giving written notice of resignation to the Issuer. Upon receiving such notice
of resignation, the Issuer shall promptly appoint a successor trustee or
trustees with respect to the applicable series by written instrument in
duplicate, executed by authority of the Board of Directors, one copy of which
instrument shall be delivered to the resigning trustee and one copy to the
successor trustee or trustees. If no successor trustee shall have been so
appointed with respect to any series and have accepted appointment within 30
days after the mailing of such notice of resignation, the resigning trustee
may petition any court of competent jurisdiction for the appointment of a
successor trustee, or any Securityholder who has been a bona fide Holder of a
Security or Securities of the applicable series for at least six
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months may, subject to the provisions of Article Five, on behalf of himself
and all others similarly situated, petition any such court for the appointment
of a successor trustee. Such court may thereupon, after such notice, if any,
as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of Section
6.8 with respect to any series of Securities after written request
therefor by the Issuer or by any Securityholder who has been a bona fide
Holder of a Security or Securities of such series for at least six
months; or
(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 6.9 and shall fail to resign after written request
therefor by the Issuer or by any such Securityholder; or
(iii) the Trustee shall become incapable of acting with respect to
any series of Securities, or shall be adjudged a bankrupt or insolvent,
or a receiver or liquidator of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, the Issuer may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such
series by written instrument, in duplicate, executed by order of the Board of
Directors one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee, or, subject to the provisions
of Article Five, any Securityholder who has been a bona fide Holder of a
Security or Securities of such series for at least six months may on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
trustee with respect to such series. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the
Securities of each series then Outstanding may at any time remove the Trustee
with respect to Securities of such series and appoint a successor trustee with
respect to the Securities of such series by delivering to the Trustee so
removed, to the successor trustee so appointed and to the Issuer the evidence
provided for in Section 7.1 of the action in that regard taken by the
Securityholders. If no successor trustee shall have been so appointed with
respect to any series and have accepted appointment within 30 days after the
delivery of such evidence of removal, the Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or any
Securityholder who has been a bona fide Holder of a Security or Securities of
the applicable series for at least six months may, subject to the provisions
of Article Five, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
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(d) Any resignation or removal of the Trustee with respect to any
series and any appointment of a successor trustee with respect to such series
pursuant to any of the provisions of this Section 6.10 shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
6.11.
SECTION 6.11. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 6.10 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and
obligations with respect to such series of its predecessor hereunder, with
like effect as if originally named as trustee for such series hereunder; but,
nevertheless, on the written request of the Issuer or of the successor
trustee, upon payment of its charges then unpaid, the trustee ceasing to act
shall, subject to Section 10.4, pay over to the successor trustee all moneys
at the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Issuer shall
execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and
powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.6.
If a successor trustee is appointed with respect to the Securities
of one or more (but not all) series, the Issuer, the predecessor Trustee and
each successor trustee with respect to the Securities of any applicable series
shall execute and deliver an indenture supplemental hereto which shall contain
such provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the predecessor Trustee with respect
to the Securities of any series as to which the predecessor Trustee is not
retiring shall continue to be vested in the predecessor Trustee, and shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such trustees co-trustees of the same
trust and that each such trustee shall be trustee of a trust or trusts under
separate indentures.
No successor trustee with respect to any series of Securities shall
accept appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor trustee shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9.
Upon acceptance of appointment by any successor trustee as provided
in this Section 6.11, the Issuer shall give notice thereof to the Holders of
Securities of each series affected, by mailing such notice to such Holders at
their addresses as they shall appear on the registry books. If the Issuer
fails to give such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
given at the expense of the Issuer.
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SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Trustee (including the trust created by this
Indenture), shall be the successor of the Trustee hereunder, provided that
such corporation shall be qualified under the provisions of Section 6.8 and
eligible under the provisions of Section 6.9, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any of the Securities of any series shall
have been authenticated but not delivered, any such successor to the Trustee
may adopt the certificate of authentication of any predecessor Trustee and
deliver such Securities so authenticated; and, in case at that time any of the
Securities of any series shall not have been authenticated, any successor to
the Trustee may authenticate such Securities either in the name of any
predecessor hereunder or in the name of the successor Trustee; and in all such
cases such certificate shall have the full force which it is anywhere in the
Securities of such series or in this Indenture provided that the certificate
of the Trustee shall have; provided, that the right to adopt the certificate
of authentication of any predecessor Trustee or to authenticate Securities of
any series in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
SECTION 6.13. Preferential Collection of Claims Against the Issuer.
The Trustee shall comply with Section 311(a) of the Trust Indenture Act of
1939, excluding any creditor relationship listed in Section 311(b) of the
Trust Indenture Act of 1939. A Trustee who has resigned or been removed shall
be subject to Section 311(a) of the Trust Indenture Act of 1939 to the extent
indicated therein.
SECTION 6.14. Appointment of Authenticating Agent. As long as any
Securities of a series remain Outstanding, the Trustee may, by an instrument
in writing, appoint with the approval of the Issuer an authenticating agent
(the "Authenticating Agent") which shall be authorized to act on behalf of the
Trustee to authenticate Securities, including Securities issued upon exchange,
registration of transfer, partial redemption or pursuant to Section 2.9.
Securities of each such series authenticated by such Authenticating Agent
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee. Whenever
reference is made in this Indenture to the authentication and delivery of
Securities of any series by the Trustee or to the Trustee's Certificate of
Authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent for such series
and a Certificate of Authentication executed on behalf of the Trustee by such
Authenticating Agent. Such Authenticating Agent shall at all times be a
corporation organized and doing business under the laws of the United States
of America or of any state or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $25,000,000 (determined as provided in Section 6.9 with respect to
the Trustee) and subject to supervision or examination by federal or state
authority.
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Any corporation into which any Authenticating Agent may be merged or
converted, or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency
business (including the authenticating agency contemplated by this Indenture)
of any Authenticating Agent, shall continue to be the Authenticating Agent
with respect to all series of Securities for which it served as Authenticating
Agent without the execution or filing of any paper or any further act on the
part of the Trustee or such Authenticating Agent. Any Authenticating Agent may
at any time, and if it shall cease to be eligible shall, resign by giving
written notice of resignation to the Trustee and to the Issuer. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving
written notice thereof to such Authenticating Agent and to the Issuer.
Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 6.14 with respect
to one or more series of Securities, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Issuer and the Issuer
shall provide notice of such appointment to all Holders of Securities of such
series in the manner and to the extent provided in Section 11.4. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as Authenticating Agent.
The Issuer agrees to pay to the Authenticating Agent for such series from time
to time reasonable compensation. The Authenticating Agent for the Securities
of any series shall have no responsibility or liability for any action taken
by it as such at the direction of the Trustee.
Sections 6.2, 6.3, 6.4 and 7.3 shall be applicable to any
Authenticating Agent.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1. Evidence of Action Taken by Securityholders. Any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in principal amount of the Securityholders of any or all series may
be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such specified percentage of Securityholders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee. Proof of execution of any instrument
or of a writing appointing any such agent shall be sufficient for any purpose
of this Indenture and (subject to Sections 6.1 and 6.2) conclusive in favor of
the Trustee and the Issuer, if made in the manner provided in this Article
Seven.
SECTION 7.2. Proof of Execution of Instruments and of Holding of
Securities. Subject to Sections 6.1 and 6.2, the execution of any instrument
by a Securityholder or his agent or proxy may be proved in the following
manner:
(a) The fact and date of the execution by any Holder of any
instrument may be proved by the certificate of any notary public or other
officer of any jurisdiction authorized to
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take acknowledgments of deeds or administer oaths that the person executing
such instruments acknowledged to him the execution thereof, or by an affidavit
of a witness to such execution sworn to before any such notary or other such
officer. Where such execution is by or on behalf of any legal entity other
than an individual, such certificate or affidavit shall also constitute
sufficient proof of the authority of the person executing the same.
(b) The ownership of Securities shall be proved by the Security
register or by a certificate of the Security registrar.
SECTION 7.3. Holders to be Treated as Owners. The Issuer, the
Trustee and any agent of the Issuer or the Trustee may deem and treat the
Person in whose name any Security shall be registered upon the Security
register for such series as the absolute owner of such Security (whether or
not such Security shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of or
on account of the principal of and, subject to the provisions of this
Indenture, interest, if any, on such Security and for all other purposes; and
neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee
shall be affected by any notice to the contrary.
SECTION 7.4. Securities Owned by Issuer Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Outstanding Securities of any or all series have concurred in any direction,
consent or waiver under this Indenture, Securities which are owned by the
Issuer or by any other obligor on the Securities with respect to which such
determination is being made or by any Affiliate of the Issuer or any other
obligor on the Securities with respect to which such determination is being
made, shall be disregarded and deemed not to be Outstanding for the purpose of
any such determination, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver
only Securities which a Responsible Officer of the Trustee knows are so owned
shall be so disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Issuer or any other obligor upon
the Securities or any Affiliate of the Issuer or any other obligor on the
Securities. In case of a dispute as to such right, the advice of counsel shall
be full protection in respect of any decision made by the Trustee in
accordance with such advice. Upon request of the Trustee, the Issuer shall
furnish to the Trustee promptly an Officers' Certificate listing and
identifying all Securities, if any, known by the Issuer to be owned or held by
or for the account of any of the above-described Persons; and, subject to
Sections 6.1 and 6.2, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth and of the
fact that all Securities not listed therein are Outstanding for the purpose of
any such determination.
SECTION 7.5. Right of Revocation of Action Taken. At any time prior
to (but not after) the evidencing to the Trustee, as provided in Section 7.1,
of the taking of any action by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action, any Holder of a
Security the serial number of which is shown by the evidence to be included
among the serial numbers of the Securities the Holders of which have consented
to such action may, by filing written notice at the Corporate Trust Office and
upon proof of holding as provided in this Article
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Seven, revoke such action so far as concerns such Security provided that such
revocation shall not become effective until three Business Days after such
filing. Except as aforesaid, any such action taken by the Holder of any
Security shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Security and of any Securities issued in exchange
or substitution therefor or on registration of transfer thereof, irrespective
of whether or not any notation in regard thereto is made upon any such
Security. Any action taken by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action shall be
conclusively binding upon the Issuer, the Trustee and the Holders of all the
Securities affected by such action.
SECTION 7.6. Record Date for Consents and Waivers. The Issuer may,
but shall not be obligated to, establish a record date for the purpose of
determining the Persons entitled to (i) waive any past default with respect to
the Securities of such series in accordance with Section 5.7 of the Indenture,
(ii) consent to any supplemental indenture in accordance with Section 8.2 of
the Indenture or (iii) waive compliance with any term, condition or provision
of any covenant hereunder. If a record date is fixed, the Holders on such
record date, or their duly designated proxies, and any such Persons, shall be
entitled to waive any such past default, consent to any such supplemental
indenture or waive compliance with any such term, condition or provision,
whether or not such Holder remains a Holder after such record date; provided,
however, that unless such waiver or consent is obtained from the Holders, or
duly designated proxies, of the requisite principal amount of Outstanding
Securities of such series prior to the date which is the 120th day after such
record date, any such waiver or consent previously given shall automatically
and without further action by any Holder be cancelled and of no further
effect.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of
Securityholders. The Issuer, when authorized by a Board Resolution (which
resolution may provide general terms or parameters for such action and may
provide that the specific terms of such action may be determined in accordance
with or pursuant to an Issuer Order), and the Trustee may from time to time
and at any time enter into an indenture or indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act of 1939 as
in force at the date of the execution thereof) for one or more of the
following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee
as security for the Securities of one or more series any property or
assets;
(b) to evidence the succession of another Person to the Issuer or
Hovnanian, or successive successions, and the assumption by the successor
Person of the covenants, agreements and obligations of the Issuer or
Hovnanian herein and the Securities or the Guarantees;
(c) to add to the covenants of the Issuer or Hovnanian such further
covenants, restrictions, conditions or provisions for the protection of
the Holders of all or any series of Securities (and if such covenants,
restrictions, conditions or provisions are to be for the
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protection of less than all series of Securities, stating that the same
are expressly being included solely for the protection of such series) or
to surrender any right or power herein conferred upon the Issuer or
Hovnanian, and to make the occurrence, or the occurrence and continuance,
of a default in any such additional covenants, restrictions, conditions
or provisions an Event of Default permitting the enforcement of all or
any of the several remedies provided in this Indenture as herein set
forth; provided, however, that in respect of any such additional
covenant, restriction, condition or provision such supplemental indenture
may provide for a particular period of grace after default (which period
may be shorter or longer than that allowed in the case of other defaults)
or may provide for an immediate enforcement upon such an Event of Default
or may limit the remedies available to the Trustee upon such an Event of
Default or may limit the right of the Holders of a majority in aggregate
principal amount of the Securities of such series to waive such an Event
of Default;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective
or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make any other provisions as the Issuer may
deem necessary or desirable, provided, however, that no such action shall
materially adversely affect the interests of the Holders of the
Securities;
(e) to establish the form or terms of Securities or the Guarantees
to be endorsed thereon of any series as permitted by Sections 2.1 and
2.3;
(f) to provide for the issuance of Securities of any series in
coupon form (including Securities registrable as to principal only) and
to provide for exchangeability of such Securities for the Securities
issued hereunder in fully registered form and to make all appropriate
changes for such purpose;
(g) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the Trust Indenture Act of 1939, or under any similar
federal statute hereafter enacted, and to add to this Indenture such
other provisions as may be expressly permitted by the Trust Indenture Act
of 1939, excluding, however, the provisions referred to in Section
316(a)(2) of the Trust Indenture Act of 1939 as in effect at the date as
of which this instrument was executed or any corresponding provision
provided for in any similar federal statute hereafter enacted; and
(h) to evidence and provide for the acceptance of appointment
hereunder of a Trustee other than First Union National Bank as Trustee
for a series of Securities and to add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 6.9 hereof;
(i) subject to Section 8.2 hereof, to add to or modify the
provisions hereof as may be necessary or desirable to provide for the
denomination of Securities in foreign currencies which shall not
adversely affect the interests of the Holders of the Securities in any
material respect;
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(j) to modify the covenants or Events of Default of the Issuer
solely in respect of, or add new covenants or Events of Default of the
Issuer that apply solely to, Securities not Outstanding on the date of
such supplemental indenture; and
(k) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee, pursuant
to the requirements of Section 6.11.
The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the
Securities then Outstanding, notwithstanding any of the provisions of Section
8.2.
SECTION 8.2. Supplemental Indentures with Consent of
Securityholders. With the consent (evidenced as provided in Article Seven) of
the Holders of not less than a majority in aggregate principal amount of the
Securities then Outstanding of any series affected by such supplemental
indenture, the Issuer, when authorized by a Board Resolution (which resolution
may provide general terms or parameters for such action and may provide that
the specific terms of such action may be determined in accordance with or
pursuant to an Issuer Order), and the Trustee may, from time to time and at
any time, enter into an indenture or indentures supplemental hereto (which
shall conform to the provisions of the Trust Indenture Act of 1939 as in force
at the date of execution thereof) for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this
Indenture or of any supplemental indenture or of modifying in any manner the
rights of the Holders of the Securities of such series; provided, that no such
supplemental indenture shall (a) extend the stated final maturity of the
principal of any Security, or reduce the principal amount thereof, or reduce
the rate or extend the time of payment of interest, if any, thereon (or, in
the case of an Original Issue Discount Security, reduce the rate of accretion
of original issue discount thereon), or reduce or alter the method of
computation of any amount payable on redemption, repayment or purchase by the
Issuer thereof (or the time at which any such redemption, repayment or
purchase may be made), or make the principal thereof (including any amount in
respect of original issue discount), or interest, if any, thereon payable in
any coin or currency other than that provided in the Securities or in
accordance with the terms of the Securities, or reduce the amount of the
principal of an Original Issue Discount Security that would be due and payable
upon an acceleration of the maturity thereof or the amount thereof provable in
bankruptcy in each case pursuant to Article Five, or impair or affect the
right of any Securityholder to institute suit for the payment thereof or, if
the Securities provide therefor, any right of repayment or purchase at the
option of the Securityholder, in each case without the consent of the Holder
of each Security so affected, or (b) reduce the aforesaid percentage of
Securities of any series, the consent of the Holders of which is
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required for any such supplemental indenture, without the consent of the
Holders of each Security so affected. No consent of any Holder of any Security
shall be necessary under this Section 8.2 to permit the Trustee and the Issuer
to execute supplemental indentures pursuant to Sections 8.1 and 9.2.
A supplemental indenture which changes or eliminates any covenant,
Event of Default or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series of
Securities, or which modifies the rights of Holders of Securities of such
series, with respect to such covenant or provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any
other series.
Upon the request of the Issuer, accompanied by a copy of a
resolution of the Board of Directors (which resolution may provide general
terms or parameters for such action and may provide that the specific terms of
such action may be determined in accordance with or pursuant to an Issuer
Order) certified by the secretary or an assistant secretary of the Issuer
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of the Holders of the
Securities as aforesaid and other documents, if any, required by Section 7.1,
the Trustee shall join with the Issuer in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may at its discretion, but shall not be obligated to, enter into such
supplemental indenture.
It shall not be necessary for the consent of the Securityholders
under this Section 8.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section 8.2, the
Issuer (or the Trustee at the request and expense of the Issuer) shall give
notice thereof to the Holders of then Outstanding Securities of each series
affected thereby, as provided in Section 11.4. Any failure of the Issuer to
give such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
SECTION 8.3. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and shall be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations,
duties and immunities under this Indenture of the Trustee, the Issuer and the
Holders of Securities of each series affected thereby shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and shall be deemed to be part of the terms
and conditions of this Indenture for any and all purposes.
SECTION 8.4. Documents to Be Given to Trustee. The Trustee, subject
to the provisions of Sections 6.1 and 6.2, shall be entitled to receive an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant to this Article Eight complies
with the applicable provisions of this Indenture and that all conditions
precedent to the execution and delivery of such supplemental indenture have
been satisfied.
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SECTION 8.5. Notation on Securities in Respect of Supplemental
Indentures. Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to the provisions of this
Article Eight may bear a notation in form approved by the Trustee for such
series as to any matter provided for by such supplemental indenture or as to
any action taken by Securityholders. If the Issuer or the Trustee shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Issuer, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by
the Issuer, authenticated by the Trustee and delivered in exchange for the
Securities of such series then Outstanding.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE, LEASE, EXCHANGE OR OTHER DISPOSITION
SECTION 9.1. Consolidate Permitted, etc., on Certain Terms. Subject
to the provisions of Section 9.2, nothing contained in this Indenture or in
any of the Securities shall prevent any consolidation or merger of the Issuer
or Hovnanian with or into any other Person or Persons (whether or not
affiliated with the Issuer), or successive consolidations or mergers in which
the Issuer or Hovnanian or their successor or successors shall be a party or
parties, or shall prevent any sale, lease, exchange or other disposition of
all or substantially all the property and assets of the Issuer or Hovnanian to
any other Person (whether or not affiliated with the Issuer or Hovnanian)
authorized to acquire and operate the same; provided, however, and the Issuer
and Hovnanian hereby covenant and agree, that any such consolidation, merger,
sale, lease, exchange or other disposition shall be upon the conditions that
(a) immediately after giving effect to such consolidation, merger, sale,
lease, exchange or other disposition of the Person (whether the Issuer or
Hovnanian or such other Person) formed by or surviving any such consolidation
or merger, or to which such sale, lease, exchange or other disposition shall
have been made, no Event of Default, and no event which after notice or lapse
of time or both, would become an Event of Default, shall have occurred and be
continuing; (b) the Person (if other than the Issuer or Hovnanian) formed by
or surviving any such consolidation or merger, or to which such sale, lease,
exchange or other disposition shall have been made, shall be a corporation or
partnership organized under the laws of the United States of America, any
state thereof or the District of Columbia; and (c) the due and punctual
payment of the principal of and interest, if any, on all the Securities,
according to their tenor, and the due and punctual performance and observance
of all of the covenants and conditions of this Indenture to be performed by
the Issuer or Hovnanian, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee executed and delivered to the Trustee, by
the Person (if other than the Issuer or Hovnanian) formed by such
consolidation, or into which the Issuer or Hovnanian shall have been merged,
or by the Person which shall have acquired or leased such property.
SECTION 9.2. Successor Corporation to be Substituted. In case of any
such consolidation or merger or any sale, conveyance or lease of all or
substantially all of the property of the Issuer or Hovnanian and upon the
assumption by the successor Person, by supplemental indenture executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due
and punctual payment of the principal of, premium, if any, and interest, if
any, on all of the Securities and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Issuer
or Hovnanian, such successor Person shall succeed to and be substituted for
the Issuer or Hovnanian, with the same effect as if it had been named
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herein as the party of the first part, and the Issuer or Hovnanian (including
any intervening successor to the Issuer or Hovnanian which shall have become
the obligor hereunder) shall be relieved of any further obligation under this
Indenture and the Securities; provided, however, that in the case of a sale,
lease, exchange or other disposition of the property and assets of the Issuer
or Hovnanian (including any such intervening successor), the Issuer or
Hovnanian (including any such intervening successor) shall continue to be
liable on its obligations under this Indenture and the Securities to the
extent, but only to the extent, of liability to pay the principal of, premium,
if any, and interest, if any, on the Securities at the time, places and rate
prescribed in this Indenture and the Securities. Such successor Person
thereupon may cause to be signed, and may issue either in its own name or in
the name of the Issuer or Hovnanian, any or all of the Securities issuable
hereunder which theretofore shall not have been signed by the Issuer or
Hovnanian and delivered to the Trustee; and, upon the order of such successor
Person instead of the Issuer or Hovnanian and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously shall have been
signed and delivered by the officers of the Issuer or Hovnanian to the Trustee
for authentication, and any Securities which such successor Person thereafter
shall cause to be signed and delivered to the Trustee for that purpose. All
the Securities so issued shall in all respects have the same legal rank and
benefit under this Indenture as the Securities theretofore or thereafter
issued in accordance with the terms of this Indenture as though all of such
Securities had been issued at the date of the execution hereof.
In case of any such consolidation or merger or any sale, lease,
exchange or other disposition of all or substantially all of the property and
assets of the Issuer or Hovnanian, such changes in phraseology and form (but
not in substance) may be made in the Securities, thereafter to be issued, as
may be appropriate.
SECTION 9.3. Opinion of Counsel to be Given Trustee. The Trustee,
subject to Sections 6.1 and 6.2, shall receive an Officers' Certificate and
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, lease, exchange or other disposition and any such assumption complies
with the provisions of this Article Nine.
ARTICLE TEN
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 10.1. Applicability of Article. Unless specified otherwise
pursuant to Section 2.3 for Securities of a series, this Article shall apply
to each series of Securities issued under this Indenture.
SECTION 10.2. Legal Defeasance And Discharge. The Issuer shall,
subject to the satisfaction of the conditions set forth in Section 10.4
hereof, be deemed to have been discharged from its obligations with respect to
all Outstanding Securities on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Issuer shall be deemed to have paid and discharged
the entire Indebtedness represented by the Outstanding Securities, which shall
thereafter be deemed to be Outstanding only for the purposes of Section 10.5
hereof and the other Sections of this Indenture referred to in clauses (a) and
(b) below, and to have satisfied all of its obligations under such Securities
and this Indenture (and the Trustee, on demand of and at the expense of the
Issuer,
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shall execute proper instruments delivered to it by the Issuer acknowledging
the same), except of the following provisions which shall survive until
otherwise terminated or discharged hereunder; (a) the rights of Holder of
Outstanding Securities to receive payments in respect of the principal of,
premium, if any, and interest on such Securities when such payments are due
from the trust referred to below; (b) the Issuer's obligations with respect to
the Securities concerning mutilated, destroyed, lost or stolen Securities and
the maintenance of an office or agency for payment and money for security
payments held in trust; (c) the rights, powers, trusts, duties and immunities
of the Trustee, and the Issuer's obligations in connection therewith; and (d)
the Legal Defeasance provisions of this Indenture.
SECTION 10.3. Covenant Defeasance. The Issuer shall, subject to the
satisfaction of the conditions set forth in Section 10.4 hereof, be released
from its obligations under the covenants contained in Articled Nine and to the
extent described in the applicable supplemental indenture, with respect to any
series of Securities, with respect to the Outstanding Securities on and after
the date of the conditions set forth in Section 10.4 are satisfied
(hereinafter, "Covenant Defeasance"), and the Securities shall thereafter be
deemed not Outstanding for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed Outstanding
for all other purposes hereunder (it being understood that such Securities
shall not be deemed outstanding for accounting purposes). For this purpose,
Covenant Defeasance means that, with respect to the Outstanding Securities,
the Issuer may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall
not constitute a default or an Event of Default under Section 5.1 hereof, but,
except as specified above, the remainder of this Indenture and such Securities
shall be unaffected thereby. Subject to the satisfaction of the conditions set
forth in Section 10.4 hereof, Sections 5.1(e), 5.1(f) and 5.1(g) hereof shall
not constitute Events of Default or defaults hereunder.
SECTION 10.4. Conditions To Legal Or Covenant Defeasance. The
following shall be the conditions to the application of either Section 10.2 or
10.3 hereof to the Outstanding Securities:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuer must irrevocably deposit, or cause to be deposited,
with the Trustee, in trust, for the benefit of the Holders of the
Securities, cash in U.S. dollars, U.S. Government Obligations, or a
combination thereof, in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public
accountants, to pay, without reinvestment, the principal of, premium, if
any, and interest on the Outstanding Securities on the stated maturity
thereof or on the applicable redemption date, as the case may be, and the
Issuer must specify whether the Securities are being defeased to maturity
or to a particular redemption date;
(b) in the case of Legal Defeasance, the Issuer must deliver to the
Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Issuer has
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received from, or there has been published by, the Internal Revenue
Service a ruling, or there has been a change in the applicable United
States federal income tax law after the date of this Indenture, in either
case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of the Outstanding Securities will not
recognize income, gain or loss for United States federal income tax
purposes as a result of such Legal Defeasance, and will be subject to
United States federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Issuer must deliver to
the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that the Holders of the Outstanding Securities will not
recognize income, gain or loss for United States federal income tax
purposes as a result of such Covenant Defeasance, and such Holders will
be subject to United States federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(d) no default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under, any material
agreement or instrument (other than the Indenture) to which the Issuer or
any of its Restricted Subsidiaries is a party or by which the issuer or
any of its Restricted Subsidiaries is bound;
(f) the Issuer must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Issuer with the intent of
preferring the Holders of the Securities over other creditors of the
Issuer, or with the intent of defeating, hindering, delaying or
defrauding creditors of the Issuer or others;
(g) the Issuer must deliver to the Trustee an Officers' Certificate
and an opinion of Counsel in the United States reasonably acceptable to
the Trustee, each stating that the conditions precedent provided for or
relating to Legal Defeasance or Covenant Defeasance, as applicable, in
the case of the Officer's Certificate, in clauses (a) through (f) and, in
the case of the opinion of Counsel, in clauses (b) and (c) of this
paragraph, have been complied with.
SECTION 10.5. Deposited Money And Government Securities To Be Held
In Trust; Other Miscellaneous Provisions. Subject to Section 10.6 hereof, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively, and
solely for purposes of this Section 10.5, the "Trustee") pursuant to Section
10.4 hereof in respect of the outstanding Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any
Paying Agent (including the Issuer acting as Paying
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Agent) as the Trustee may determine, to the Holders of such Securities of all
sums due and to become due thereon in respect of principal, premium, if any,
and interest, but such money need not be segregated from other funds except to
the extent required by law.
The Issuer shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable U.S.
Government Obligations deposited pursuant to Section 10.4 hereof or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
Outstanding Securities.
Anything in this Article Ten to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon the request
of the Issuer any money or non-callable U.S. Government Obligations held by it
as provided in Section 10.4 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 10.4(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 10.6. Repayment To Issuer. Any money deposited with the
Trustee or any Paying Agent, or then held by the Issuer, in trust for the
payment of the principal of, premium or interest on any Security and remaining
unclaimed for two years after such principal, and premium, if any, or interest
has become due and payable shall be paid to the Issuer on its request or (if
then held by the Issuer) shall be discharged from such trust; and the Holder
of such Security shall thereafter, as an unsecured creditor, look only to the
Issuer for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Issuer as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at
the expense of the Issuer cause to be published once, in the New York Times
and The Wall Street Journal (national edition), 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 notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer
SECTION 10.7. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or non-callable U.S. Government Obligations in
accordance with Section 10.2 or 10.3 hereof, as the case may be, by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Issuer's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 10.2 or 10.3
hereof until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 10.2 or 10.3 hereof, as the case may
be; provided, however, that, if the Issuer makes any payment of principal of,
premium, if any, or interest on any Security following the reinstatement of
its obligations, the Issuer shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money held by the Trustee
or Paying Agent.
SECTION 10.8. Survival. The Trustee's rights under this Article Ten
shall survive termination of this Indenture.
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SECTION 10.9. Satisfaction and Discharge of Indenture. If at any
time (a) the Issuer shall have paid or caused to be paid the principal of,
premium, if any, and interest, if any, on all the Securities Outstanding
(other than Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.9) as and when the same
shall have become due and payable, or (b) the Issuer shall have delivered to
the Trustee for cancellation all Securities theretofore authenticated (other
than Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.9); and if, in any such case, the
Issuer shall also pay or cause to be paid all other sums payable hereunder by
the Issuer (including all amounts, payable to the Trustee pursuant to Section
6.6), then this Indenture shall cease to be of further effect, and the
Trustee, on demand of the Issuer accompanied by an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent relating to
the satisfaction and discharge contemplated by this provision have been
complied with, and at the cost and expense of the Issuer, shall execute proper
instruments acknowledging such satisfaction and discharging this Indenture.
The Issuer agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred, and to compensate the Trustee for
any services thereafter reasonably and properly rendered, by the Trustee in
connection with this Indenture or the Securities.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1. Partners, Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from Individual Liability. No recourse under or
upon any obligation, covenant or agreement contained in this Indenture, or in
any Security, or because of any indebtedness evidenced thereby, shall be had
against any incorporator, as such or against any past, present or future
stockholder, officer or director, as such, of the Issuer, or any partner of
the Issuer or of any successor, either directly or through the Issuer or any
successor, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being expressly waived and released by the
acceptance of the Securities by the Holders thereof and as part of the
consideration for the issue of the Securities.
SECTION 11.2. Provisions of Indenture for the Sole Benefit of
Parties and Holders of Securities. Nothing in this Indenture or in the
Securities, expressed or implied, shall give or be construed to give to any
Person, other than the parties hereto and their successors and the Holders of
the Senior Indebtedness and the Holders of the Securities, any legal or
equitable right, remedy or claim under this Indenture or under any covenant or
provision herein contained, all such covenants and provisions being for the
sole benefit of the parties hereto and their successors and of the Holders of
the Securities.
SECTION 11.3. Successors and Assigns of Issuer Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Issuer shall bind its successors and assigns,
whether so expressed or not.
SECTION 11.4. Notices and Demands on Issuer, Trustee and Holders of
Securities. Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the Holders
of Securities to or on the Issuer,
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or as required pursuant to the Trust Indenture Act of 1939, may be given or
served by being deposited postage prepaid, first-class mail (except as
otherwise specifically provided herein) addressed (until another address of
the Issuer is filed by the Issuer with the Trustee) to K. Hovnanian
Enterprises, Inc., 10 Highway 35, P.O. Box 500, Red Bank, New Jersey 07701.
Any notice, direction, request or demand by the Issuer or any Holder of
Securities to or upon the Trustee shall be deemed to have been sufficiently
given or served by being deposited postage prepaid, first-class mail (except
as otherwise specifically provided herein) addressed (until another address of
the Trustee is filed by the Trustee with the Issuer) to First Union National
Bank, 21 South Street, Morristown, New Jersey 07960, [attention: Corporate
Trust Administration (K. Hovnanian Enterprises, Inc. [specify series of
Securities])].
Where this Indenture provides for notice to Holders of Securities,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder entitled thereto, at his last address as it appears in the Security
register. Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular
mail service, it shall be impracticable to mail notice to the Issuer when such
notice is required to be given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be reasonably satisfactory to
the Trustee shall be deemed to be sufficient notice.
SECTION 11.5. Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, or as required pursuant to the Trust Indenture Act of 1939, the
Issuer or Hovnanian, as applicable, shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent have been complied with, except that in the case of any
such application or demand as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or demand, no additional certificate or opinion need be
furnished.
Each certificate or opinion provided for in this Indenture (other
than a certificate provided pursuant to Section 4.3(d)) and delivered to the
Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition, (b) 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, (c) 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
opinion as to whether or not such covenant or condition has been complied
with, and (d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
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Any certificate, statement or opinion of an officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous. Any certificate, statement or opinion of counsel may be based,
insofar as it relates to factual matters, on information with respect to which
is in the possession of the Issuer, or Hovnanian, as applicable, upon the
certificate, statement or opinion of or representations by an officer or
officers of the Issuer, or Hovnanian, as applicable, unless such counsel knows
that the certificate, statement or opinion or representations with respect to
the matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer or
Hovnanian, as applicable, or of counsel may be based, insofar as it relates to
accounting matters, upon a certificate or opinion of or representations by an
accountant or firm of accountants in the employ of the Issuer or Hovnanian, as
applicable, unless such officer or counsel, as the case may be, knows that the
certificate or opinion or representations with respect to the accounting
matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate or opinion of any independent firm of public
accountants filed with and directed to the Trustee shall contain a statement
that such firm is independent.
SECTION 11.6. Payments Due on Saturdays, Sundays and Holidays. If
the date of maturity of principal of or interest, if any, on the Securities of
any series or the date fixed for redemption, purchase or repayment of any such
Security shall not be a Business Day, then payment of interest, if any,
premium, if any, or principal need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made
on the date of maturity or the date fixed for redemption, purchase or
repayment, and, in the case of payment, no interest shall accrue for the
period after such date.
SECTION 11.7. Conflict of Any Provision of Indenture with Trust
Indenture Act of 1939. If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with another provision included in
this Indenture which is required to be included herein by any of Sections 310
to 317, inclusive, or is deemed applicable to this Indenture by virtue of the
provisions, of the Trust Indenture Act of 1939, such required provision shall
control.
SECTION 11.8. GOVERNING LAW. THIS INDENTURE AND EACH SECURITY SHALL
BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL
PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 11.9. Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall together constitute but one and the same instrument.
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SECTION 11.10. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1. Applicability of Article. The provisions of this
Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any sinking fund for the retirement of
Securities of a series except as otherwise specified, as contemplated by
Section 2.3 for Securities of such series.
SECTION 12.2. Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Securities of any series to be redeemed as a
whole or in part at the option of the Issuer shall be given by mailing notice
of such redemption by first class mail, postage prepaid, at least 30 days and
not more than 60 days prior to the date fixed for redemption to such Holders
of Securities of such series at their last addresses as they shall appear in
the Security register. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or
not the Holder receives the notice. Failure to give notice by mail, or any
defect in the notice to the Holder of any Security of a series designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security of such series.
The notice of redemption to each such Holder shall specify (i) the
principal amount of each Security of such series held by such Holder to be
redeemed, (ii) the date fixed for redemption, (iii) the redemption price, (iv)
the place or places of payment, (v) the CUSIP number relating to such
Securities, (vi) that payment will be made upon presentation and surrender of
such Securities, (vii) whether such redemption is pursuant to the mandatory or
optional sinking fund, or both, if such be the case, (viii) whether interest,
if any, (or, in the case of Original Issue Discount Securities, original issue
discount) accrued to the date fixed for redemption will be paid as specified
in such notice and (ix) whether on and after said date interest, if any, (or,
in the case of Original Issue Discount Securities, original issue discount)
thereon or on the portions thereof to be redeemed will cease to accrue. In
case any Security of a series is to be redeemed in part only, the notice of
redemption shall state the portion of the principal amount thereof to be
redeemed and shall state that on and after the date fixed for redemption, upon
surrender of such Security, a new Security or Securities of such series in
principal amount equal to the unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be redeemed
at the option of the Issuer shall be given by the Issuer or, at the Issuer's
request, by the Trustee in the name and at the expense of the Issuer.
On or before the redemption date specified in the notice of
redemption given as provided in this Section 12.2, the Issuer will deposit
with the Trustee or with one or more paying agents (or, if the Issuer is
acting as its own paying agent, set aside, segregate and hold in trust as
provided in Section 3.5) an amount of money sufficient to redeem on the
redemption date all the
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Securities of such series so called for redemption at the appropriate
redemption price, together with accrued interest, if any, to the date fixed
for redemption. The Issuer will deliver to the Trustee at least 45 days prior
to the date fixed for redemption (unless a shorter notice period shall be
satisfactory to the Trustee) an Officers' Certificate stating the aggregate
principal amount of Securities to be redeemed. In case of a redemption at the
election of the Issuer prior to the expiration of any restriction on such
redemption, the Issuer shall deliver to the Trustee, prior to the giving of
any notice of redemption to Holders pursuant to this Section, an Officers'
Certificate stating that such restriction has been complied with.
If less than all the Securities of a series are to be redeemed, the
Trustee, within 10 Business Days after the Issuer gives written notice to the
Trustee that such redemption is to occur, shall select, in such manner as it
shall deem appropriate and fair, Securities of such series to be redeemed.
Notice of the redemption shall be given only after such selection has been
made. Securities may be redeemed in part in multiples equal to the minimum
authorized denomination for Securities of such series or any multiple thereof.
The Trustee shall promptly notify the Issuer in writing of the Securities of
such series selected for redemption and, in the case of any Securities of such
series selected for partial redemption, the principal amount thereof to be
redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities of any
series shall relate, in the case of any Security redeemed or to be redeemed
only in part, to the portion of the principal amount of such Security which
has been or is to be redeemed.
SECTION 12.3. Payment of Securities Called for Redemption. If notice
of redemption has been given as provided by this Article Twelve, the
Securities or portions of Securities specified in such notice shall become due
and payable on the date and at the place or places stated in such notice at
the applicable redemption price, together with interest, if any, accrued to
the date fixed for redemption, and on and after said date (unless the Issuer
shall default in the payment of such Securities at the redemption price,
together with interest, if any, accrued to said date) interest, if any (or, in
the case of Original Issue Discount Securities, original issue discount) on
the Securities or portions of Securities so called for redemption shall cease
to accrue, and such Securities shall cease from and after the date fixed for
redemption (unless an earlier date shall be specified in a Board Resolution,
Officers' Certificate or executed supplemental indenture referred to in
Sections 2.1 and 2.3 by or pursuant to which the form and terms of the
Securities of such series were established) except as provided in Sections 6.5
and 10.4, to be entitled to any benefit or security under this Indenture, and
the Holders thereof shall have no right in respect of such Securities except
the right to receive the redemption price thereof and unpaid interest, if any,
to the date fixed for redemption. On presentation and surrender of such
Securities at a place of payment specified in said notice, said Securities or
the specified portions thereof shall be paid and redeemed by the Issuer at the
applicable redemption price, together with interest, if any, accrued thereon
to the date fixed for redemption; provided that payment of interest, if any,
becoming due on or prior to the date fixed for redemption shall be payable to
the Holders of Securities registered as such on the relevant record date
subject to the terms and provisions of Sections 2.3 and 2.7 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the redemption price shall, until paid or
duly provided for, bear interest from the
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date fixed for redemption at the rate of interest or Yield to Maturity (in the
case of an Original Issue Discount Security) borne by such Security.
Upon presentation of any Security redeemed in part only, the Issuer
shall execute and the Trustee shall authenticate and deliver to or on the
order of the Holder thereof, at the expense of the Issuer, a new Security or
Securities of such series, and of like tenor, of authorized denominations, in
principal amount equal to the unredeemed portion of the Security so presented.
SECTION 12.4. Exclusion of Certain Securities from Eligibility for
Selection for Redemption. Securities shall be excluded from eligibility for
selection for redemption if they are identified by registration and
certificate number in an Officers' Certificate delivered to the Trustee at
least 45 days prior to the last date on which notice of redemption may be
given as being owned of record and beneficially by, and not pledged or
hypothecated by either (a) the Issuer, or (b) a Person specifically identified
in such written statement as an Affiliate of the Issuer.
SECTION 12.5. Mandatory and Optional Sinking Funds. The minimum
amount of any sinking fund payment provided for by the terms of the Securities
of any series is herein referred to as a "mandatory sinking fund payment," and
any payment in excess of such minimum amount provided for by the terms of the
Securities of any series is herein referred to as an "optional sinking fund
payment." The date on which a sinking fund payment is to be made is herein
referred to as the "sinking fund payment date."
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Securities in cash, the Issuer may at
its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of such
series (not previously so credited) theretofore purchased or otherwise
acquired (except as aforesaid) by the Issuer and delivered to the Trustee for
cancellation pursuant to Section 2.10, (b) receive credit for optional sinking
fund payments (not previously so, credited) made pursuant to this Section
12.5, or (c) receive credit for Securities of such series (not previously so
credited) redeemed by the Issuer through any optional redemption provision
contained in the terms of such series. Securities so delivered or credited
shall be received or credited by the Trustee at the sinking fund redemption
price specified in such Securities.
On or before the 60th day next preceding each sinking fund payment
date for any series, the Issuer will deliver to the Trustee an Officers'
Certificate (a) specifying the portion of the mandatory sinking fund payment
to be satisfied by payment of cash and the portion to be satisfied by credit
of Securities of such series and the basis for such credit, (b) stating that
none of the Securities of such series to be so credited has theretofore been
so credited, (c) stating that no defaults in the payment of interest or Events
of Default with respect to such series have occurred (which have not been
waived or cured or otherwise ceased to exist) and are continuing, and (d)
stating whether or not the Issuer intends to exercise its right to make an
optional sinking fund payment with respect to such series and, if so,
specifying the amount of such optional sinking fund payment which the Issuer
intends to pay on or before the next succeeding sinking fund payment date. Any
Securities of such series to be credited and required to be delivered to
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the Trustee in order for the Issuer to be entitled to credit therefor as
aforesaid which have not theretofore been delivered to the Trustee shall be
delivered for cancellation pursuant to Section 2.10 to the Trustee with such
Officers' Certificate (or reasonably promptly thereafter if acceptable to the
Trustee). Such Officers' Certificate shall be irrevocable and upon its receipt
by the Trustee the Issuer shall become unconditionally obligated to make all
the cash payments or payments therein referred to, if any, on or before the
next succeeding sinking fund payment date. Failure of the Issuer, on or before
any such 60th day, to deliver such Officers' Certificate and Securities
(subject to the parenthetical clause in the second preceding sentence)
specified in this paragraph, if any, shall not constitute a default but shall
constitute, on and as of such date, the irrevocable election of the Issuer (i)
that the mandatory sinking fund payment for such series due on the next
succeeding sinking fund payment date shall be paid entirely in cash without
the option to deliver or credit Securities of such series in respect thereof,
and (ii) that the Issuer will make no optional sinking fund payment with
respect to such series as provided in this Section 12.5.
If the sinking fund payment or payments (mandatory or optional or
both) to be made in cash on the next succeeding sinking fund payment date plus
any unused balance of any preceding sinking fund payments made in cash shall
exceed $50,000, or a lesser sum if the Issuer shall so request with respect to
the Securities of any particular series, such cash shall be applied on the
next succeeding sinking fund payment date to the redemption of Securities of
such series at the sinking fund redemption price together with accrued
interest, if any, to the date fixed for redemption. If such amount shall be
$50,000 or less and the Issuer makes no such request, then it shall be carried
over until a sum in excess of $50,000 is available. The Trustee shall select,
in the manner provided in Section 12.2, for redemption on such sinking fund
payment date a sufficient principal amount of Securities of such series to
absorb said cash, as nearly as may be, and shall (if requested in writing by
the Issuer) inform the Issuer of the serial numbers of the Securities of such
series (or portions thereof) so selected. The Issuer, or the Trustee, in the
name and at the expense of the Issuer (if the Issuer shall so request the
Trustee in writing) shall cause notice of redemption of the Securities of such
series to be given in substantially the manner provided in Section 12.2 (and
with the effect provided in Section 12.3) for the redemption of Securities of
such series in part at the option of the Issuer. The amount of any sinking
fund payments not so applied or allocated to the redemption of Securities of
such series shall be added to the next cash sinking fund payment for such
series and, together with such payment, shall be applied in accordance with
the provisions of this Section 12.5. Any and all sinking fund moneys held on
the stated maturity date of the Securities of any particular series (or
earlier, if such maturity is accelerated), which are not held for the payment
or redemption of particular Securities of such series shall be applied,
together with other moneys, if necessary, sufficient for the purpose, to the
payment of the principal of, and interest, if any, on, the Securities of such
series at maturity.
On or before each sinking fund payment date, the Issuer shall pay to
the Trustee in cash or shall otherwise provide for the payment of all
interest, if any, accrued to the date fixed for redemption on Securities to be
redeemed on such sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities
of a series with sinking fund moneys or give any notice of redemption of
Securities for such series by operation of the sinking fund during the
continuance of a default in payment of interest on such
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Securities or of any Event of Default with respect to such series except that,
where the giving of notice of redemption of any Securities shall theretofore
have been made, the Trustee shall redeem or cause to be redeemed such
Securities, provided that it shall have received from the Issuer a sum
sufficient for such redemption. Except as aforesaid, and subject to Article
Thirteen, any moneys in the sinking fund for such series at the time when any
such default or Event of Default known to a Responsible Officer of the Trustee
shall occur, and any moneys thereafter paid into the sinking fund, shall,
during the continuance of such default or Event of Default, be deemed to have
been collected under Article Five and held for the payment of all such
Securities. In case such Event of Default shall have been waived as provided
in Article Five or the default cured on or before the 60th day preceding the
sinking fund payment date in any year, such moneys shall thereafter be applied
on the next succeeding sinking fund payment date in accordance with this
Section to the redemption of such Securities.
ARTICLE THIRTEEN
SUBORDINATION
SECTION 13.1. Securities Subordinated to Senior Indebtedness. (a)
The Issuer covenants and agrees, and each Holder of Securities of each series,
by his acceptance thereof, likewise covenants and agrees, that anything in
this Indenture or the Securities of any series to the contrary
notwithstanding, the indebtedness evidenced by the Securities of each series
is subordinate and junior in right of payment, to the extent provided herein,
to all Senior Indebtedness, whether outstanding on the date of execution of
this Indenture or thereafter created, incurred or assumed, and that the
subordination is for the benefit of the holders of Senior Indebtedness.
(b) Subject to Section 13.4, if (i) the Issuer shall default in the
payment of any principal of, premium, if any, or interest, if any, on any
Senior Indebtedness when the same becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration of acceleration or
otherwise, or (ii) any other default shall occur with respect to Senior
Indebtedness and the maturity of such Senior Indebtedness has been accelerated
in accordance with its terms, then, upon written notice of such default to the
Issuer and the Trustee by the holders of Senior Indebtedness or any trustee
therefor, unless and until, in either case, the default has been cured or
waived, or has ceased to exist, or any such acceleration has been rescinded or
such Senior Indebtedness has been paid in full, no direct or indirect payment
(in cash, property, securities, by set-off or otherwise) shall be made or
agreed to be made on account of the principal of, premium, if any, or
interest, if any, on any of the Securities, or in respect of any redemption,
retirement, purchase or other acquisition of any of the Securities other than
those made in capital stock of the Issuer (or cash in lieu of fractional
shares thereof).
(c) If any default (other than a default described in paragraph (b)
of this Section 13.1) shall occur under the Senior Indebtedness, pursuant to
which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration) or
the expiration of any applicable grace periods occurs (a "Senior Nonmonetary
Default"), then, upon the receipt by the Issuer and the Trustee of written
notice thereof (a "Payment Notice") from or on behalf of holders of such
Senior Indebtedness specifying an election to prohibit such payment and other
action by the Issuer in accordance with the following provisions of this
paragraph (c), the Issuer may not make any payment or take any
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other action that would be prohibited by paragraph (b) of this Section 13.1
during the period (the "Payment Blockage Period") commencing on the date of
receipt of such Payment Notice and ending on the earlier of (i) the date, if
any, on which the holders of such Senior Indebtedness or their representative
notify the Trustee that such Senior Nonmonetary Default is cured or waived or
ceases to exist or the Senior Indebtedness to which such Senior Nonmonetary
Default relates is discharged or (ii) the 179th day after the date of receipt
of such Payment Notice. Notwithstanding the provisions described in the
immediately preceding sentence, the Issuer may resume payments on the
Securities following such Payment Blockage Period. Any number of Payment
Notices may be given; provided, however, that (i) not more than one Payment
Notice shall be given within a period of any 360 consecutive days, and (ii) no
default that existed upon the date of such Payment Notice or the commencement
of such Payment Blockage Period (whether or not such event of default is on
the same issue of Senior Indebtedness) shall be made the basis for the
commencement of any other Payment Blockage Period.
(d) If (i) (A) without the consent of the Issuer, a receiver,
conservator, liquidator or trustee of the Issuer or of any of its property is
appointed by the order or decree of any court or agency or supervisory
authority having jurisdiction, and such decree or order remains in effect for
more than 60 days or (B) the Issuer is adjudicated bankrupt or insolvent or
(C) any of its property is sequestered by court order and such order remains
in effect for more than 60 days or (D) a petition is filed against the Issuer
under any state or federal bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, liquidation or receivership law
of any jurisdiction whether now or hereafter in effect (including without
limitation the Bankruptcy Code), and is not dismissed within 60 days after
such filing; or (ii) the Issuer (A) commences a voluntary case or other
proceeding seeking liquidation, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or other relief with respect to
itself or its debt or other liabilities under any bankruptcy, insolvency or
other similar law now or hereafter in effect (including without limitation the
Bankruptcy Code) or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part
of its property, or (B) consents to any such relief or to the appointment of
or taking possession by any such official in an involuntary case or other
proceeding commenced against it, or (C) fails generally to, or cannot, pay its
debts generally as they become due or (D) takes any corporate action to
authorize or effect any of the foregoing; or (iii) any Subsidiary of the
Issuer takes, suffers or permits to exist any of the events or conditions
referred to in the foregoing clause (i) or (ii), then all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made to any Holder of
any Securities on account thereof. Any payment or distribution, whether in
cash, securities or other property (other than securities of the Issuer or any
other corporation provided for by a plan of reorganization or readjustment the
payment of which is subordinate, at least to the extent provided in these
subordination provisions with respect to the indebtedness evidenced by the
Securities to the payment of all Senior Indebtedness then outstanding and to
any securities issued in respect thereof under any such plan of reorganization
or adjustment) which would otherwise (but for these subordination provisions)
be payable or deliverable in respect of the Securities of any series shall be
paid or delivered directly to the holders of Senior Indebtedness in accordance
with the priorities then existing among such holders until all Senior
Indebtedness (including any interest thereon accruing after the commencement
of any such proceedings) shall have been paid in full. In the event of any
such proceeding, after payment in full of all sums owing with respect to
Senior
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Indebtedness, the Holders of the Securities, together with the holders of any
obligations of the Issuer ranking on a parity with the Securities, shall be
entitled to be paid from the remaining assets of the Issuer the amounts at the
time due and owing on account of unpaid principal of and interest, if any, on
the Securities and such other obligations before any payment or other
distribution, whether in cash, property or otherwise, shall be made on account
of any capital stock or any obligations of the Issuer ranking junior to the
Securities and such other obligations.
(e) If, notwithstanding the foregoing, any payment or distribution
of any character, whether in cash, securities or other property (other than
securities of the Issuer or any other corporation provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least
to the extent provided in the subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness then outstanding and to any securities issued in respect thereof
under any such plan of reorganization or readjustment), shall be received by
the Trustee or any Holder in contravention of any of the terms hereof, such
payment or distribution of securities shall be received in trust for the
benefit of and shall be paid over or delivered and transferred to the holders
of the Senior Indebtedness then outstanding in accordance with the priorities
then existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full. In the event of the failure of the Trustee or any Holder
to endorse or assign any such payment, distribution or security, each holder
of such Senior Indebtedness is hereby irrevocably authorized to endorse or
assign the same.
(f) No present or future holder of any Senior Indebtedness shall be
prejudiced in the right to enforce subordination of the indebtedness evidenced
by the Securities by any act or failure to act on the part of the Issuer or
any Holder of Securities. Nothing contained herein shall impair, as between
the Issuer and the Holders of Securities of each series, the obligation of the
Issuer to pay to such Holders the principal of and interest, if any, on such
Securities or prevent the Trustee or the Holder from exercising all rights,
powers and remedies otherwise permitted by applicable law or hereunder upon a
default or Event of Default hereunder, all subject to the rights of the
holders of the Senior Indebtedness to remove cash, securities or other
property otherwise payable or deliverable to the Holders.
(g) Senior Indebtedness shall not be deemed to have been paid in
full unless the holders thereof shall have received cash, securities or other
property equal to the amount of such Senior Indebtedness then outstanding.
Upon the payment in full of all Senior Indebtedness, the Holders of Securities
of each series shall be subrogated to all rights of any holders of Senior
Indebtedness to receive any further payment or distributions applicable to the
Senior Indebtedness until the indebtedness evidenced by the Securities of such
series shall have been paid in full and such payments or distributions
received by such Holders, by reason of such subrogation, of cash, securities
or other property which otherwise would be paid or distributed to the holders
of Senior Indebtedness, shall, as between the Issuer and its creditors other
than the holders of Senior Indebtedness, on the one hand, and such Holders, on
the other hand, be deemed to be a payment by the Issuer on account of Senior
Indebtedness, and not on account of the Securities of such series.
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(h) The provisions of this Section 13.1 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Issuer in respect
of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
(i) The securing of any obligations of the Issuer, otherwise ranking
on a parity with the Securities, shall not be deemed to prevent such
obligations from constituting, respectively, obligations ranking on a parity
with the Securities.
SECTION 13.2. Reliance on Certificate of Liquidating Agent; Further
Evidence as to Ownership of Senior Indebtedness. Upon any payment or
distribution of assets of the Issuer, the Trustee and the Holders shall be
entitled to rely upon an order or decree issued by any court of competent
jurisdiction in which such dissolution or winding up or liquidation or
reorganization or arrangement proceedings are pending or upon a certificate of
the bankruptcy trustee, receiver, assignee for the benefit of creditors or
other Person making such payment or distribution, delivered to the Trustee or
to the Holders, for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Issuer, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Thirteen. In the absence of any such bankruptcy
trustee, receiver, assignee or other Person, the Trustee shall be entitled to
rely upon written notice by a Person representing himself to be a holder of
Senior Indebtedness (or a trustee or representative on behalf of such holder)
as evidence that such Person is a holder of Senior Indebtedness (or is such a
trustee or representative). If the Trustee determines, in good faith, that
further evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distributions
pursuant to this Article Thirteen, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, as to the extent to which
such Person is entitled to participate in such payment or distribution, and to
other facts pertinent to the rights of such Person under this Article
Thirteen, and if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
SECTION 13.3. Payment Permitted If No Default. Nothing contained in
this Article Thirteen or elsewhere in this Indenture, or in any of the
Securities, shall prevent (a) the Issuer at any time, except during the
pendency of any default with respect to Senior Indebtedness described in
Section 13.1(b) or Section 13.1(c) or of any of the events described in
Section 13.1(d), from making payments of the principal of or interest, if any,
on the Securities, or (b) the application by the Trustee or any paying agent
of any moneys deposited with it hereunder to payments of the principal of or
interest, if any, on the Securities, if, at the time of such deposit, the
Trustee or such paying agent, as the case may be, did not have the written
notice provided for in Section 13.5 of any event prohibiting the making of
such deposit, or if, at the time of such deposit (whether or not in trust) by
the Issuer with the Trustee or paying agent (other than the Issuer) such
payment would not have been prohibited by the provisions of this Article
Thirteen, and the Trustee or any paying agent shall not be affected by any
notice to the contrary received by it on or after such date.
SECTION 13.4. Disputes with Holders of Certain Senior Indebtedness.
Any failure by the Issuer to make any payment on or under any Senior
Indebtedness, other than any
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Senior Indebtedness as to which the provisions of this Section 13.4 shall have
been waived by the Issuer in the instrument or instruments by which the Issuer
incurred, assumed, guaranteed or otherwise created such Senior Indebtedness,
shall not be deemed a default under Section 13.1 hereof if (i) the Issuer
shall be disputing its obligation to make such payment or perform such
obligation, and (ii) either (A) no final judgment relating to such dispute
shall have been issued against the Issuer which is in full force and effect
and is not subject to further review, including a judgment that has become
final by reason of the expiration of the time within which a party may seek
further appeal or review, or (B) if a judgment that is subject to further
review or appeal has been issued, the Issuer shall in good faith be
prosecuting an appeal or other proceeding for review, and a stay of execution
shall have been obtained pending such appeal or review.
SECTION 13.5. Trustee Not Charged with Knowledge of Prohibition.
Anything in this Article Thirteen or elsewhere in this Indenture contained to
the contrary notwithstanding, the Trustee shall not at any time be charged
with knowledge of the existence of any facts which would prohibit the making
of any payment of moneys to or by the Trustee and shall be entitled to assume
conclusively that no such facts exist and that no event specified in clauses
(b) and (c) of Section 13.1 has happened unless and until the Trustee shall
have received an Officers' Certificate to the effect or notice in writing to
that effect signed by or on behalf of the holder or holders, or the
representatives, of Senior Indebtedness who shall have been certified by the
Issuer or otherwise established to the reasonable satisfaction of the Trustee
to be such holder or holders or representatives or from any trustee under any
indenture pursuant to which such Senior Indebtedness shall be outstanding;
provided, however, that, if the Trustee shall not have received the Officers'
Certificate or notice provided for in this Section 13.5 at least three
Business Days preceding the date upon which by the terms hereof any moneys
become payable for any purpose (including, without limitation, the payment of
either the principal of or interest, if any, on any Security), then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to receive such moneys and apply the same to the purpose
for which they were received and shall not be affected by any notice to the
contrary that may be received by it within three Business Days preceding such
date. The Issuer shall give prompt written notice to the Trustee and to each
paying agent of any facts that would prohibit any payment of moneys to or by
the Trustee or any paying agent, and the Trustee shall not be charged with
knowledge of the curing of any default or the elimination of any other fact or
condition preventing such payment or distribution unless and until the Trustee
shall have received an Officers' Certificate to such effect.
SECTION 13.6. Trustee to Effectuate Subordination. Each Holder of
Securities by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate
the subordination as between such Holder and holders of Senior Indebtedness as
provided in this Article Thirteen and appoints the Trustee its
attorney-in-fact for any and all such purposes.
SECTION 13.7. Rights of Trustee as Holder of Senior Indebtedness.
The Trustee shall be entitled to all the rights set forth in this Article
Thirteen with respect to any Senior Indebtedness which may at the time be held
by it, to the same extent as any other holder of Senior Indebtedness and
nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder. Nothing in this Article Thirteen shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 6.6.
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SECTION 13.8. Article Applicable to Paying Agents. In case at any
time any paying agent other than the Trustee shall have been appointed by the
Issuer and be then acting hereunder, the term "Trustee" as used in this
Article Thirteen shall in such case (unless the context shall otherwise
require) be construed as extending to and including such paying agent within
its meaning as fully for all intents and purposes as if the paying agent were
named in this Article Thirteen in addition to or in place of the Trustee;
provided, however, that Sections 13.5 and 13.7 shall not apply to the Issuer
if it acts as paying agent.
SECTION 13.9. Subordination Rights Not Impaired by Acts or Omissions
of the Issuer or Holders of Senior Indebtedness. No right of any present or
future holders of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Issuer or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Issuer with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with. The
holders of Senior Indebtedness, may at any time or from time to time and in
their absolute direction, change the manner, place or terms of payment, change
or extend the time of payment of, or renew or alter, any such Senior
Indebtedness, or amend or supplement any instrument pursuant to which any such
Senior Indebtedness is issued or by which it may be secured, or release any
security therefor, or exercise or refrain from exercising any other of their
rights under such Senior Indebtedness, including, without limitation, the
waiver of default thereunder, all without notice to or assent from the Holders
of the Securities or the Trustee and without affecting the obligations of the
Issuer, the Trustee or the Holders of Securities under this Article Thirteen.
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of the Senior Indebtedness, and shall not be liable to any such
holders if it shall mistakenly pay over or distribute money or assets to
Securityholders or the Issuer. With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants or obligations as are specifically set forth in this Article
Thirteen and no implied covenants or obligations with respect to holders of
Senior Indebtedness shall be read into this Indenture against the Trustee.
ARTICLE FOURTEEN
SUBORDINATED GUARANTEE
SECTION 14.1. Applicability of Article. The provisions of this
Article shall be applicable to Hovnanian and to each of the Guarantors
specified pursuant to Section 2.3 for the Guarantee of Securities of a series.
SECTION 14.2. Guarantee. Each Guarantor of a particular series of
Securities hereby unconditionally guarantees (each such guarantee to be
referred to herein as a "Guarantee"), jointly and severally with each other
Guarantor of the Securities of that series, if any, to each Holder of such
Securities authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability of
this Indenture, such Securities or the obligations of the Company hereunder or
thereunder, (i) the due and punctual payment of the principal of and any
premium or interest on such Securities,
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whether at maturity or on an interest payment date, by acceleration, pursuant
to an offer to purchase such Securities or otherwise, and interest on the
overdue principal of and interest, if any, on such Securities, if lawful, and
all other obligations of the Company to the Holders of such Securities or the
Trustee hereunder or thereunder shall be promptly paid in full, all in
accordance with the terms hereof and thereof including all amounts payable to
the Trustee under Section 6.6 hereof, and (ii) in case of any extension of
time of payment or renewal of any such Securities or any of such other
obligations, the same shall be promptly paid in full when due or to be
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.
If the Company fails to make any payment when due of any amount so
guaranteed for whatever reason, the Guarantor of the Securities of that series
shall be obligated, jointly and severally with each other Guarantor, if any,
to pay the same immediately. Each Guarantor hereby agrees that its obligations
hereunder shall be continuing, absolute and unconditional, irrespective of,
and shall be unaffected by, the validity, regularity or enforceability of the
Securities, this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Securities or the Trustee with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of such
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, demand of performance, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding
first against the Company, the benefit of discussion, protest, notice and all
demand whatsoever and covenants that its Guarantee shall not be discharged
except by complete performance of the obligations contained in the Securities
guaranteed by such Guarantee, in this Indenture and in this Article 14. If any
Holder of Securities of a series guaranteed hereby or the Trustee is required
by any court or otherwise to return to the Company or any Guarantor of such
Securities, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor, any amount paid by the
Company or any Guarantor of such Securities to the Trustee or such Holder,
this Article 13, to the extent theretofore discharged with respect to any
Guarantee of such Securities, shall be reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Securities of a series guaranteed
hereby by such Guarantor in respect of any obligations guaranteed hereby by
such Guarantee until payment in full of all such obligations. Each Guarantor
further agrees that, as between such Guarantor, on the one hand, and the
Holders of Securities of a series guaranteed hereby by such Guarantor and the
Trustee on the other hand, (i) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article 5 hereof for the purposes of
such Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations guaranteed hereby
and (ii) in the event of any acceleration of such obligations as provided in
Article 5 hereof such obligations (whether or not due and payable) shall
forthwith become due and payable by such Guarantor, jointly severally with any
other Guarantor of such Securities, for the purpose of this Article 14. In
addition, without limiting the foregoing, upon the effectiveness of an
acceleration under Article 5, the Trustee may make a demand for payment on the
Securities under any Guarantee provided hereunder and not discharged.
With respect to each Guarantee by a Guarantor, such Guarantor shall
be subrogated to all rights of the Holder of any Securities guaranteed hereby
by such Guarantee
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against the Company in respect of any amounts paid to such Holder by such
Guarantor pursuant to the provisions of such Guarantee; provided that the
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 and
interest on all such Securities shall have been paid in full.
The Guarantee set forth in this Section 14.1 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by the
Trustee or any duly appointed agent.
The Guarantees provided in this Section 14.1 shall not be valid or
become obligatory for any purpose with respect to a Security until the
certificate of authentication on such Security shall have been signed by the
Trustee or any duly appointed agent.
SECTION 14.3. Guarantee Subordinated to Senior Debt of the
Guarantor.
Each Guarantor agrees, and each Holder of the Securities by his
acceptance thereof likewise agrees, that the payments pursuant to the
Guarantee by each Guarantor shall be subordinated in accordance with the
following provisions of this Article 14 to the prior payment in full of all
Senior Debt of each Guarantor.
"Senior Debt of each Guarantor" means the Principal of and interest
on:
(1) all indebtedness for money borrowed by each Guarantor or which
is evidenced by a bond, debenture, note or other similar
instrument or agreement whether or not for money borrowed;
(2) lease obligations of the Guarantor;
(3) all indebtedness, secured or unsecured, in connection with the
acquisition or improvement of any property or asset or the
acquisition of any business by the Guarantor;
(4) all indebtedness secured by any mortgage, lien, pledge, charge
or encumbrance upon property owned by the Guarantor and all
indebtedness secured in the manner specified in this clause (4)
even if a Guarantor has not assumed or become liable for the
payment thereof;
(5) all customer deposits held by each Guarantor in escrow accounts
pending closing of the related sales;
(6) all indebtedness of each Guarantor created or arising under any
conditional sale or other title retention agreement with
respect to property acquired by each Guarantor or otherwise
representing the deferred and unpaid balance of the purchase
price of any such property, including all indebtedness created
or arising in the manner specified in this clause (6) even
though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to
repossession or sale of such property;
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(7) guarantees by each Guarantor, direct or indirect, of any
indebtedness of another Person of the types referred to in
clauses (1), (2), (3), (4), (5) or (6); and
(8) contingent obligations of the Guarantor in respect of, or to
purchase or otherwise acquire or be responsible or liable for
through the purchase of products or services, irrespective of
whether such products are delivered or such services are
rendered, any such indebtedness referred to in clauses (1),
(2), (3), (4), (5) or (6),
which indebtedness, lease obligation, deposit, guarantee or contingent
obligation each Guarantor has directly or indirectly created, incurred,
assumed, guaranteed or otherwise become liable or responsible for, whether
currently outstanding or hereafter created. All references to indebtedness
include any renewals, extensions, refundings, amendments and modifications of
any such indebtedness issued in exchange for such indebtedness; provided,
however, that Senior Debt of each Guarantor shall not include, without
limitation (i) a Guarantee, (ii) the guarantee by each Guarantor of the
Subordinated Notes, (iii) accounts payable or any other indebtedness to trade
creditors created or assumed by each Guarantor in the ordinary course of
business in connection with the obtaining of materials or services, (iv) any
liability for federal, state or local taxes owed or owing by each Guarantor
and (v) any indebtedness as to which, in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is provided that
such indebtedness is on a parity with or otherwise not superior in right of
payment to a Guarantee.
This Article 14 shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Debt of each Guarantor, and such provisions are made for the benefit of
the holders of Senior Debt of the Guarantor, and such holders are made
obligees hereunder and any one or more of them may enforce such provisions.
SECTION 14.4. Guarantors Not to Make Payments With Respect to
Securities in Certain Circumstances.
(a) Upon the maturity of the principal of any Senior Debt of each
Guarantor (other than payment of sinking fund installments) by lapse of time,
acceleration or otherwise, all principal thereof and interest thereon shall
first be paid in full, or such payment duly provided for in cash or in a
manner satisfactory to the holders of such Senior Debt of each Guarantor,
before any payment, pursuant to the Guarantee, is made on account of the
principal or interest on the Securities or to acquire any of the Securities or
on account of the mandatory redemption provisions in the Securities (except
mandatory redemption payments made in respect of Securities acquired by each
Guarantor before the maturity of such Senior Debt of each Guarantor).
(b) Unless Section 14.4 shall be applicable, upon (1) the occurrence
of a Payment Default with respect to Senior Debt of each Guarantor and receipt
by each Guarantor and the Trustee of written notice of such occurrence or (2)
upon the acceleration of such indebtedness, then no payment or distribution of
any assets of each Guarantor of any kind or
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character shall be made by each Guarantor or the Trustee on account of
principal of (or premium, if any) or interest on the Securities or on account
of the purchase or redemption or other acquisition of Securities, unless and
until such Payment Default shall have been cured or waived in writing or shall
have ceased to exist or such Senior Debt of each Guarantor shall have been
discharged, after which each Guarantor shall resume making any and all
required payments in respect of the Securities, including any missed payments.
(c) Unless Section 14.4 shall be applicable, upon (1) the occurrence
of a Non-Payment Default and (2) receipt by the Trustee of written notice of
such occurrence, then no payment or distribution of any assets of each
Guarantor of any kind or character shall be made by each Guarantor or the
Trustee on account of any principal of (or premium, if any) or interest on the
Securities or on account of the purchase or redemption or other acquisition of
Securities, for a period ("Payment Blockage Period") commencing on the earlier
of the date of receipt by the Trustee of such written notice from the holder
of Senior Debt of each Guarantor or of the Company, or any representative of a
holder of Senior Debt of each Guarantor or of the Company unless and until
(subject to any blockage of payment that may then be in effect under
subsection (a) of this Section) the earlier of (x) more than 120 days shall
have elapsed since receipt of such written notice by each Guarantor or the
Trustee, whichever was earlier, (y) such Non-Payment Default shall have been
cured or waived in writing or shall have ceased to exist or such Senior Debt
of each Guarantor or of the Company shall have been discharged or (z) such
Payment Blockage Period shall have been terminated by written notice to each
Guarantor or to the Company, as the case may be, or to the Trustee from the
holders of the Senior Debt of each Guarantor or of the Company or any
representative of the holders of the Senior Debt of each Guarantor or of the
Company initiating such Payment Blockage Period, after which, in the case of
clause (x), (y) or (z), each Guarantor shall promptly resume making any and
all required payments in respect of the Securities, including any missed
payments. In no event shall a Payment Blockage Period extend beyond 120 days
from the date of the receipt by the Trustee of the notice referred to in
clause (2) hereof (the "Initial Period"). Any number of additional Payment
Blockage Periods may be commenced during the Initial Period; provided,
however, that no such additional period shall extend beyond the Initial
Period. After the expiration of the Initial Period, no Payment Blockage Period
may be commenced on the basis of a Non-Payment Default on the Senior Debt
which was the basis of a Payment Blockage Period commenced during the Initial
Period until at least 270 consecutive days have elapsed from the last day of
the Initial Period. No Non-Payment Default which existed or was continuing on
the date of the commencement of any Payment Blockage Period and of which the
applicable Senior Debt holder(s) are aware shall be, or be made, the basis for
the commencement of a second Payment Blockage Period whether or not within a
period of 270 consecutive days unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days.
(d) In the event that notwithstanding the provisions of this Section
14.3 each Guarantor shall make, pursuant to this Guarantee, any payment or
distribution of any character to the Trustee on account of the principal of or
interest on the Securities, or on account of the mandatory redemption
provisions, after the happening of an event of default with respect to any
Senior Debt of each Guarantor based on a default in the payment of the
principal or interest on Senior Debt of each Guarantor, or after receipt by
the Trustee of written notice as provided in this Section 14.3 of an Event of
Default with respect to any Senior Debt of each Guarantor, or after the
acceleration of the Securities of any series pursuant to Section 5.1, then,
but only if the
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Trustee is in receipt of the notice specified in Section 14.7, unless and
until such default or event of default shall have been cured or waived or
shall have ceased to exist, or such acceleration shall have been rescinded,
such payment (subject to the provisions of Sections 14.7 and 14.8) shall be
held by the Trustee in trust for the benefit of, and, if the Senior Debt of
each Guarantor shall have been declared immediately due and payable, shall be
paid forthwith over and delivered to, the holders of Senior Debt of each
Guarantor (pro rata as to each of such holders on the basis of the respective
amounts of Senior Debt of each Guarantor held by them) or their representative
or the trustee under the indenture or other agreement (if any) pursuant to
which Senior Debt of each Guarantor may have been issued, as their respective
interests may appear, such payments to be made in accordance with an Officers'
Certificate as provided in Section 11.5 (on which the Trustee may conclusively
rely) identifying all holders of Senior Debt of each Guarantor and the
principal amount of Senior Debt of each Guarantor then outstanding held by
each and stating the reasons why such Officers' Certificate is being delivered
to the Trustee, for application to the payment of all Senior Debt of each
Guarantor remaining unpaid to the extent necessary to pay all Senior Debt of
each Guarantor in full in accordance with its terms, after giving effect to
any concurrent payment or distribution to or for the holders of Senior Debt of
each Guarantor. In the event of the failure of any Holder of a Security to
endorse or assign any such payment or distribution, each holder of Senior Debt
of each Guarantor is hereby irrevocably authorized to endorse or assign the
same. Each Guarantor shall give prompt notice to the Trustee of any default
under any Senior Debt of each Guarantor or under any agreement pursuant to
which Senior Debt of each Guarantor may have been issued, as required by
Section 3.5.
SECTION 14.5. Guarantee Subordinated to Prior Payment of All Senior
Debt of a Guarantor on Dissolution, Winding Up, Liquidation or Reorganization
of the Guarantor.
In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to a Guarantor, its creditors or its property, (ii) any
case or proceeding for the liquidation, dissolution or other winding-up of a
Guarantor, voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings, (iii) any assignment by such Guarantor for the benefit
of creditors, or (iv) any other marshalling of the assets of such Guarantor:==
(a) the holders of all Senior Debt of such Guarantor shall first be
entitled to receive payment in full (or to have such payment
duly provided for) of the principal and interest due thereon
(including any interest thereon accruing after commencement of
any such proceeding) before the Holders of the Securities are
entitled to receive, pursuant to this Guarantee any payment or
any distribution, whether in cash, securities or other
property, on account of the principal or interest on the
Securities;
(b) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities
(other than securities of such Guarantor as reorganized or
readjusted or securities of such Guarantor or any other
company, trust or corporation provided for by a plan of
reorganization or readjustment, junior or the payment of which
is otherwise subordinate, at least to the extent provided in
this Article, to the payment of all Senior Debt of such
Guarantor at the time outstanding and to the
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payment of all securities issued in exchange therefor to the
holders of the Senior Debt of such Guarantor at the time
outstanding), to which the Holders of the Securities or the
Trustee on behalf of the Holders of the Securities would be
entitled, pursuant to this Guarantee except for the provisions
of this Article 14.4, including any such payment or
distribution which may be payable or deliverable by reason of
the payment of any other indebtedness of such Guarantor being
subordinated to the payment of the Securities, shall be paid by
the liquidating trustee or agent or other person making such
payment or distribution directly to the holders of Senior Debt
of such Guarantor or their representative(s), or to the trustee
under any indenture under which Senior Debt of such Guarantor
may have been issued (pro rata as to each such holder,
representative or trustee on the basis of the respective
amounts of unpaid Senior Debt of such Guarantor held or
represented by each), to the extent necessary to make payment
in full of all Senior Debt of such Guarantor remaining unpaid
after giving effect to any concurrent payment or distribution
or provision therefor to the holders of such Senior Debt of
such Guarantor; and
(c) in the event that notwithstanding the foregoing provisions of
this Section 14.4, any payment or distribution of assets of
such Guarantor of any kind or character, whether in cash,
property or securities shall be received, pursuant to the
Guarantee, by the Trustee or the Holders of the Securities on
account of principal or interest on the Securities before all
Senior Debt of such Guarantor is paid in full, or effective
provisions made for its payment, such payment or
distribution(subject to the provisions of Sections 14.7 and
14.8) shall be received and held in trust for and shall be paid
over or delivered to the liquidating trustee, agent or other
person making such payment or distribution or to the holders of
the Senior Debt of such Guarantor remaining unpaid or
unprovided for or their representative, or to the trustee under
any indenture under which Senior Debt of such Guarantor may
have been issued (pro rata as provided in subsection (b)
above), for application to the payment of such Senior Debt of
such Guarantor until all such Senior Debt of such Guarantor
shall have been paid in full, after giving effect to any
concurrent payment or distribution or provision therefor to the
holders of such Senior Debt of such Guarantor.
If a Guarantor effects a transaction permitted by Article Nine, such
transaction shall not be deemed to be a dissolution, winding up, liquidation
or reorganization of such Guarantor for purposes of this Section.
A Guarantor shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of such Guarantor,
assignment for the benefit of creditors by such Guarantor or any other
marshalling of assets of such Guarantor.
SECTION 14.6. Holders to be Subrogated to Rights of Holders of
Senior Debt of each Guarantor.
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Subject to the payment in full of all Senior Debt of each Guarantor,
the Holders of the Securities shall be subrogated to the rights of the holders
of Senior Debt of each Guarantor to receive payments or distributions of
assets of each Guarantor applicable to the Senior Debt of each Guarantor until
all amounts owing under the Guarantee shall be paid in full and for the
purpose of such subrogation no payments or distributions to the holders of
Senior Debt of each Guarantor by virtue of this Article 14 which otherwise
would have been made to the Holders of the Securities, shall, as between each
Guarantor, its creditors other than holders of its Senior Debt of each
Guarantor and the Holders, be deemed to be a payment by each Guarantor to or
on account of the Senior Debt of each Guarantor, it being understood that the
provisions of this Article 14 are solely for the purpose of defining the
relative rights of the holders of Senior Debt of the Guarantors on the one
hand and the Holders on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article shall have been
applied, pursuant to the provisions of this Article, to the payment of Senior
Debt of each Guarantor, then and in such case, the Holders shall be entitled
to receive from the holders of such Senior Debt of each Guarantor at the time
outstanding any payments or distributions received by such holders of such
Senior Debt of each Guarantor in excess of the amount sufficient to pay all
amounts payable under or in respect of such Senior Debt of each Guarantor in
full.
SECTION 14.7. Obligations of Each Guarantor Unconditional.
Nothing contained in this Article 14 or elsewhere in this Indenture
or in any Security is intended to or shall impair, as between a Guarantor and
the Holders, the obligations of the Guarantor, which are absolute and
unconditional, to pay to the Holders the principal of and interest on the
Securities as and when the same shall become due and payable in accordance
with the provisions of this Guarantee or is intended to or shall affect the
relative rights of the Holders and creditors of a Guarantor other than the
holders of the Senior Debt of such Guarantor, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon Default under this Indenture,
subject to the rights, if any, under this Article 14 of the holders of Senior
Debt of a Guarantor in respect of cash, property or securities of such
Guarantor received upon the exercise of any such remedy.
Upon any distribution of assets of a Guarantor referred to in this
Article 14, the Trustee, subject to the provisions of Sections 6.1 and 6.2,
and the Holders of the Securities shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other person making any
distribution to the Trustee or to the Holders of the Securities, for the
purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Debt and other indebtedness of each
Guarantor, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this
Article 14.
SECTION 14.8. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
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The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee, and the Trustee shall not be required to withhold payment to the
Holders of Securities as provided in Section 14.3(d), unless and until the
Trustee shall have received written notice thereof at its Corporate Trust
Office from a Guarantor or from one or more holders of Senior Debt of such
Guarantor or from any representative thereof or trustee therefor identifying
the specific sections of this Indenture involved and describing in detail the
facts that would obligate the Trustee to withhold payments to Holders of
Securities, as well as any other facts required by the next succeeding
paragraph of this Section 14.7; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Sections 6.1 and 6.2, shall
be entitled to assume conclusively that no such facts exist.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing himself to be a holder of Senior Debt
of a Guarantor (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior Debt of such Guarantor or a
trustee on behalf of any such holder. In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of
any person as a holder of Senior Debt of a Guarantor to participate in any
payment or distribution pursuant to this Article 14, the Trustee may request
such person to furnish evidence to the reasonable satisfaction of the Trustee
as to the amount of Senior Debt of such Guarantor held by such person, the
extent to which such person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such person under
this Article 14, and if such evidence is not furnished the Trustee may defer
any payment to such person pending judicial determination as to the right of
such person to receive such payment.
SECTION 14.9. Application by Trustee of Monies Deposited with It.
Except as provided in Section 10 any deposit of monies by a
Guarantor with the Trustee or any Paying Agent (whether or not in trust) for
the payment of the principal or interest on any Securities shall be subject to
the provisions of Sections 14.2, 14.3, 14.4 and 14.5 except that, if prior to
the opening of business on the date on which by the terms of this Indenture
any such monies may become payable for any purpose (including, without
limitation, the payment, pursuant to this Guarantee, of either the principal
or the interest on any Security) the Trustee shall not have received with
respect to such monies the notice provided for in Section 14.7, then the
Trustee shall have full power and authority to receive such monies and to
apply the same to the purpose for which they were received and shall not be
affected by any notice to the contrary which may be received by it on or after
such date, without, however, limiting any rights that holders of Senior Debt
of a Guarantor may have to recover any such payments from the Holders in
accordance with the provisions of this Article.
SECTION 14.10. Subordination Rights Not Impaired by Acts or
Omissions of a Guarantor or Holders of Senior Debt of such Guarantor.
No right of any present or future holders of any Senior Debt of a
Guarantor to enforce subordination as provided herein shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of such
Guarantor or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by such Guarantor with the terms of this
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Indenture, regardless of any knowledge thereof which any such holder may have
or be otherwise charged with. The holders of Senior Debt of such Guarantor may
extend, renew, modify or amend the terms of the Senior Debt of such Guarantor
or any security therefor and release, sell or exchange such security and
otherwise deal freely with such Guarantor, all without affecting the
liabilities and obligations of the parties to this Indenture or the Holders.
SECTION 14.11. Holders Authorize Trustee to Effectuate Subordination
of Securities.
Each Holder of the Securities by his acceptance thereof authorizes
and expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article 14 and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of a Guarantor (whether in bankruptcy, insolvency or
receivership proceedings, voluntary liquidation or upon assignment for the
benefit of creditors or otherwise) tending towards liquidation of the business
and assets of the Guarantor, the timely filing of a claim for the unpaid
balance, pursuant to this Guarantee, of its or his Securities in the form
required in said proceedings and cause said claim to be approved. If the
Trustee does not file a proper claim or proof of debt in the form required in
such proceeding on or prior to 30 days before the expiration of the time to
file such claim or claims, then the holders of Senior Debt of the Guarantor
have the right to file and are hereby authorized to file an appropriate claim
for and on behalf of the Holders of said Securities.
SECTION 14.12. Right of Trustee to Hold Senior Debt of a Guarantor.
The Trustee in its individual capacity, shall be entitled to all of
the rights set forth in this Article 14 in respect of any Senior Debt of a
Guarantor at any time held by it to the same extent as any other holder of
such Senior Debt of a Guarantor, and nothing in this Indenture shall be
construed to deprive the Trustee of any of its rights as such holder.
SECTION 14.13. Trustee Not Fiduciary for Holders of Senior Debt of a
Guarantor.
With respect to the holders of Senior Debt of a Guarantor, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article 14, and no implied
covenants or obligations with respect to the holders of Senior Debt of a
Guarantor shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior Debt of
a Guarantor and the Trustee shall not be liable to any holder of Senior Debt
of a Guarantor if it shall pay over or deliver to Holders of Securities, a
Guarantor or any other person monies or assets to which any holder of Senior
Debt of such Guarantor shall be entitled by virtue of this Article 14 or
otherwise.
SECTION 14.14. Article 14 Not To Prevent Events of Default.
The failure to make a payment on account of principal or interest on
the Securities of any series by reason of any provision in this Article 14
shall not be construed as preventing the occurrence of an Event of Default
under Section 5.1.
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SECTION 14.15. Execution and Delivery of Guarantee. To evidence a
Guarantee set forth in this Article 14, the Guarantor hereby agrees that the
Guarantee Notation, substantially in the form of Exhibit A hereto, shall be
endorsed on each Security authenticated and delivered by the Trustee that is
guaranteed by such Guarantee and that this Indenture shall be executed on
behalf of such Guarantor by its Chairman of the Board, its President or one of
its Vice Presidents under a facsimile of its seal reproduced thereon.
Each Guarantor hereby agrees that its Guarantee shall remain in full
force and effect notwithstanding any failure to endorse the Guarantee Notation
on each such Security.
If an officer whose signature is on this Indenture or on the
Securities guaranteed hereby no longer holds that office at the time the
Trustee authenticates the Security on which a notation of the Guarantee is
endorsed, such Guarantee shall be valid nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of each
Guarantee thereof.
SECTION 14.16. Subordination of Indebtedness Owed by the Company to
a Guarantor.
Any indebtedness owed by the Company to a Guarantor shall be
subordinate to all obligations of the Company with respect to the Securities
and this Indenture to the same extent as the Securities are subordinated to
Senior Debt of the Company.
SECTION 14.17. Officers' Certificate.
If there occurs an event referred to in the first sentence of
Section 14.4(c) or the first sentence of Section 14.4, the applicable
Guarantor shall promptly give to the Trustee an Officers' Certificate (on
which the Trustee may conclusively rely) identifying all holders of Senior
Debt of such Guarantor and the principal amount of Senior Debt of such
Guarantor then outstanding held by each such holder and stating the reasons
why such Officers' Certificate is being delivered to the Trustee.
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K. HOVNANIAN ENTERPRISES, INC.
By ___________________________
[title]
[CORPORATE SEAL]
Attest:
- --------------------------------
Secretary
[CORPORATE SEAL]
HOVNANIAN ENTERPRISES, INC.
GUARANTOR
By ___________________________
[title]
[CORPORATE SEAL]
Attest:
- --------------------------------
Secretary
[CORPORATE SEAL]
FIRST UNION NATIONAL BANK, AS TRUSTEE
By ___________________________
[title]
Attest:
- --------------------------------
Trust Officer
EXHIBIT A
[FORM OF NOTATION OF SECURITY
RELATING TO GUARANTEE]
GUARANTEE
[Name of Guarantor] (hereinafter referred to as the "Guarantor",
which term includes any successor person under the Indenture (the "Indenture")
referred to in the Security upon which this notation is endorsed) (the
"Endorsed Security"), has unconditionally guaranteed (i) the due and punctual
payment of the principal of, premium, if any, and interest on the Endorsed
Security and all other Securities of the same series as the Endorsed Security
(the "Guaranteed Securities"), whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal
of, premium, if any, and interest, if any, on the Guaranteed Securities, to
the extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders of Guaranteed Securities or the
Trustee all in accordance with the terms set forth in Article 14 of the
Indenture and (ii) in case of any extension of time of payment or renewal of
any Guaranteed Securities or any of such other obligations, that the same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Indenture.
The obligations of the Guarantor to the Holders of Guaranteed
Securities and to the Trustee pursuant to the Guarantee evidenced hereby and
the Indenture are expressly set forth in Article 14 of the Indenture and
reference is hereby made to such Indenture for the terms of such Guarantee.
No stockholder, officer, director or incorporator, as such, past,
present or future, of the Guarantor shall have any personal liability under
the Guarantee evidenced hereby by reason of his or its status as such
stockholder, officer, director or incorporator.
The Guarantee evidenced hereby shall not be valid or obligatory for
any purpose until the certificate of authentication of the Guaranteed
Securities shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
Guarantor
[SEAL]
[NAME OF GUARANTOR]
By_____________________
By_____________________
EXHIBIT B
[SUBSIDIARY GUARANTORS]
Exhibit 12.1
HOVNANIAN ENTERPRISES, INC.
Statement setting forth computation showing the ratio of earnings
to fixed charges, including wholly owned
mortgage banking and finance subsidiaries
(Dollars in Thousands)
Six
Months Year Year Year Year
Ended Year Ended Ended Ended Ended
April Ended October October October October
30, October 31, 31, 31, 31, 31,
2001 2000 1999 1998 1997 1996
Actual Actual Actual Actual Actual Actual
---------------------------------------------------------------------
Net Income (Loss)............................ 20,983 33,163 30,075 25,403 (6,970) 17,287
Add:
Federal and State Income Taxes............. 13,144 18,655 19,674 15,141 (5,154) 7,719
Extraordinary Loss......................... 868 748
Interest Expensed Res & Comm............... 23,454 34,956 31,570 39,352 37,704 32,157
Interest Expensed Mortgage & Finance
Subsidiaries............................. 1,323 2,491 3,240 3,099 1,778 2,354
Amortization of Bond Prepaid Expenses...... 484 670 549 625 636 671
Minority Interest.......................... (48) 910
---------------------------------------------------------------------
Total Earnings........................... 59,340 90,845 85,976 84,368 27,994 60,188
=====================================================================
Fixed Charges:
Interest Incurred Res & Comm............... 23,905 38,878 24,594 28,947 34,777 35,551
Interest Incurred Mortgage & Finance
Subsidiaries............................. 1,323 2,491 3,240 3,099 1,778 2,354
Amortization of Bond Prepaid Expenses...... 484 670 1,033 1,043 636 671
Amortization of Bond Discount.............. 179 30
---------------------------------------------------------------------
---------------------------------------------------------------------
Total Fixed Charges...................... 25,891 42,069 28,867 33,089 37,191 38,576
=====================================================================
Ratio 2.3 2.2 3.0 2.5 (a) 1.6
(a) Earnings for the year ended October 31, 1997 were insufficient to cover
fixed charges for such period by $9,197,000.
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related prospectus of Hovnanian
Enterprises, Inc. (the "Company"), K. Hovnanian Enterprises, Inc. and certain
subsidiaries of the Company for the registration of 7,643,312 shares of Class
A Common Stock of the Company and $376,000,000 of Preferred Stock, Class A
Common Stock, Warrants to Purchase Preferred Stock, Warrants to Purchase Class
A Common Stock, Debt Securities, Warrants to Purchase Debt Securities, Stock
Purchase Contracts, Stock Purchase Units, Guaranteed Debt Securities and
Guaranteed Warrants to Purchase Debt Securities and to the incorporation by
reference therein of our report dated December 13, 2000 (except for Note 15,
paragraph 4, as to which the date is January 23, 2001) with respect to the
consolidated financial statements of the Company included in its Annual Report
(Form 10-K) for the year ended October 31, 2000, filed with the Securities and
Exchange Commission.
/s/Ernst & Young LLP
New York, New York
August 27, 2001
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)___ _
FIRST UNION NATIONAL BANK
(Name of Trustee)
22-1147033
(Jurisdiction of Incorporation or (I.R.S. Employer
Organization if not a U.S. National Bank) Identification No.)
301 South College Street, Charlotte, North Carolina 28288-0630
(Address of Principal Executive Offices) (Zip Code)
Hovnanian Enterprises, Inc.
(Name of Obligor)
Delaware 22-1851059
(State of Incorporation) (I.R.S. Employer
Identification No.)
10 Highway 35, PO Box 500 Redbank, NJ 07701
(Address of Principal Executive Offices) (Zip Code)
Debt Securities
(Title of Indenture Securities)
GENERAL
Item 1. General information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject:
Comptroller of the Currency, Washington, D.C.
Board of Governors of the Federal Reserve System, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust
powers.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 3. Voting Securities of the Trustee.
Furnish the following information as to each class of voting securities of the
trustee:
Col. A Col. B
------ ------
Title of Class Amount Outstanding
Not applicable
Item 4. Trusteeship under Other Indentures:
If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:
(a) Title of the securities outstanding under each such other
indenture.
Not Applicable
(b) A brief statement of the facts relied upon as a basis for the
claim that no conflicting interest within the meaning of Section 310(b)(1) of
the Act arises as a result of the trusteeship under any such other indenture,
including a statement as to how the indenture securities will rank as compared
with the securities issued under such other indenture.
Not Applicable.
Item 5. Interlocking Directorates and Similar Relationships with the Obligor
or Underwriters.
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the obligor, identify
each such person having any such connection and state the nature of each such
connection.
Not Applicable
Item 6. Voting Securities of the Trustee Owned by the Obligor or its
Officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner and
executive officer of the obligor.
- ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D.
- ------ ------ ------ -------
Name of Owner Title of Class Amount owned Percentage of Voting
beneficially securities represented by
amount given in Col. C
Not Applicable
Item 7. Voting Securities of the Trustee Owned by Underwriters or their
Officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner, and executive officer of each such underwriter.
- ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D.
- ------ ------ ------ -------
Name of Owner Title of Class Aount owned Percentage of Voting
beneficially securities represented
by amount given in Col. C
Not Applicable
Item 8. Securities of the Obligor Owned or Held by the Trustee.
Furnish the following information as to securities of the obligor
owned beneficially or held as collateral security for the obligations in
default by the trustee.
- ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D.
- ------ ------ ------ -------
Whether the Amount owned beneficially Percent of class
securities are or held as collateral represented by
voting or non obligations in default amount given in
Not Applicable voting by Trustee Col C
Item 9. Securities of the Underwriters Owned or Held by the Trustee.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor,
furnish the following information as to each class of securities of such
underwriter any of which are so owned or held by the trustee.
- ------------------------------------------------------------------------------
Col A. Col. B. Col. C. Col. D.
- --------------- ------------ ----------------------- ---------------------
Amount owned
beneficially or held as
Name of collateral security for Percent of class
Issuer and Amount obligations in default represented by amount
title of Class outstanding by Trustee given in Col. C.
Not applicable
Item 10. Ownership or Holdings by the Trustee of Voting Securities of Certain
Affiliates or Security Holders of the Obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10 percent or more of the voting securities of the
obligor or (2) is an affiliate, other than a subsidiary, of the obligor,
furnish the following information as to the voting securities of such person.
- ------------------------------------------------------------------------------
Col. A. Col. B. Col. C. Col. D.
- ----------- ----------------- ------------------------ -----------------
Amount owned beneficially Percent of Voting
Name of Amount Outstanding or held as collateral securities
issuer and security for obligations represented by
title of class in default by Trustee amount given in
Col. C.
- ------------------------------------------------------------------------------
Not Applicable
Item 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.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of the
trustee, owns 50 percent or more of the voting securities of the obligor,
furnish the following information as to each class of securities of such
person any of which are so owned or held by the Trustee.
- ------------------------------------------------------------------------------
Col. A. Col. B. Col. C. Col. D.
- ------- ------- ------- -------
Amount owned beneficially Percent of class
Name of Amount Outstanding or held as collateral securities
issuer and security for obligations represented by
title of class in default by Trustee given in Col. C.
- ------------------------------------------------------------------------------
Not Applicable
Item 12. Indebtedness of the Obligor to the Trustee.
Except as noted in the instructions, if the obligor is indebted to
the trustee, furnish the following information:
Col. A. Col. B. Col. C.
- ------- ------- -------
Nature of indebtedness Amount outstanding Date due
- ------------------------------------------------------------------------------
Not Applicable
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.
None
(b) If the trustee is a trustee under another indenture under which
any other securities, or certificates of interest or participation in any
other securities, of the obligor
are outstanding, or is trustee for more than one outstanding series of
securities under the indenture, state whether there has been default under any
such indenture or series, identify the indenture or series affected, and
explain the nature of any such default.
None
Item 14. Affiliations with the Underwriters.
If any underwriter is an affiliate of the trustee, describe each
such affiliation.
Not Applicable
Item 15. Foreign Trustee.
Identify the order or rule pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be
qualified under the Act.
Not Applicable
Item 16. Lists of Exhibits.
1* -Copy of Articles of Association of the Trustee as now in effect.
2 -No certificate of authority of the Trustee to commence
business is furnished since this authority is contained in
the Articles of Association of the Trustee.
3** -Copy of the authorization of the Trustee to exercise corporate trust
powers.
4** -Copy of the existing By-Laws of the Trustee, as now in effect.
5 -Not applicable.
6 -The consent of the Trustee required by Section 321 (b) of the Act.
7 -A copy of the latest report of Condition of the Trustee
published pursuant to the law or the requirements of its
supervising or examining authority.
8 -Not Applicable
9 -Not Applicable__________
*Exhibit thus designated has heretofore been filed with the Securities and
Exchange Commission, have not been amended since filing and are incorporated
herein by reference (see Exhibit T-1 Registration Number 333-47985).
**Exhibits thus designated have heretofore been filed with the Securities and
Exchange Commission, have not been amended since filing and are incorporated
herein by reference (see Exhibit T-1 Registration Number 333-49145).
In answering any item in this statement of eligibility and
qualification which relates to matters peculiarly within the knowledge of the
obligor or of its directors or officers, or an underwriter for the obligor,
the undersigned, First Union National Bank, has relied upon information
furnished to it by the obligor or such underwriter.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, First Union National Bank, a national banking association organized
and existing under the laws of the United States, has duly caused this
Statement of Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Morristown, and State of New
Jersey, on the 17th day of August, 2001
First Union National Bank
(Trustee)
(CORPORATE SEAL)
By:___/s/ Stephanie Roche___
_________________________
Vice President
Exhibit T-6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust
Indenture Act of 1939, and in connection with the proposed issue of Hovnanian
Enterprises, Inc. we hereby consent that reports of examinations by Federal,
State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
FIRST UNION NATIONAL BANK
By:_____/s/ Stephanie Roche_________
_________________________________
Vice President
Morristown, NJ
August 17, 2001
EXHIBIT T-7
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the First Union National
Bank, at the close of business on June 30, 2001, published in response to call
made by Comptroller of the Currency, under title 12, United States Code,
Section 161. Charter Number 22693 Comptroller of the Currency.
Statement of Resources and Liabilities
ASSETS
Thousand of Dollars
-------------------
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin......... 9,537,000
Interest-bearing balances.................................. 1,509,000
Securities................................................... /////////
Hold-to-maturity securities................................ 0
Available-for-sale securities.............................. 45,221,000
Federal funds sold and securities purchased under agreements //////////
to resell 6,315,000
Loans and lease financing receivables:
Loan and leases held for sale 6,148,000
Loan and leases, net of unearned income......122,125,000
LESS: Allowance for loan and lease losses......1,740,000
LESS: Allocated transfer risk reserve.................0
Loans and leases, net of unearned income, allowance, and
reserve................................................. 120,385,000
Trading Assets .............................. 19,000,000
Premises and fixed assets (including capitalized leases)...... 2,742,000
Other real estate owned....................................... 100,000
Investment in unconsolidated subsidiaries and associated //////////
companies..................................................... 316,000
Customer's liability to this bank on acceptances outstanding... 856,000
Intangible assets.............................................
Goodwill.................................................. 2,329,000
Other intangible Assets...................................... 344,000
Other assets.................................................. 12,662,000
Total assets............................................... 227,646,000
LIABILITIES
Deposits:
In domestic offices..................................... 131,429,000
Noninterest-bearing..................... .. 20,764,000
Interest-bearing......................... 110,665,000
In foreign offices, Edge and Agreement subsidiaries,
and IBFs................................................ 11,657,000
Noninterest-bearing............................. 80,000
Interest-bearing.............................11,577,000
Federal funds purchased and securities sold under agreements
to repurchase 19,794,000
Trading liabilities........................................... 11,908,000
Other borrowed money:......................................... 22,811,000
Bank's liability on acceptances executed and outstanding..... 859,000
Subordinated notes and debentures............................ 5,993,000
Other liabilities............................................ 6,513,000
Total liabilities............................................ 210,964,000
Minority Interest in consolidated subsidiaries............... 964,000
EQUITY CAPITAL
Perpetual preferred stock and related surplus................. 161,000
Common Stock.................................................. 455,000
Surplus....................................................... 13,309,000
Retained Earnings........................ 1,877,000
Accumulated other comprehensive income............................. (84,000)
Other Equity Capital components........... 0
Total equity capital.......................................... 15,718,000
Total liabilities and equity capital.... 227,646,000
EXHIBIT 25.2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)___ _
FIRST UNION NATIONAL BANK
(Name of Trustee)
22-1147033
(Jurisdiction of Incorporation or (I.R.S. Employer
Organization if not a U.S. National Bank) Identification No.)
301 South College Street, Charlotte, North Carolina 28288-0630
(Address of Principal Executive Offices) (Zip Code)
K. Hovnanian Enterprises, Inc.
(Name of Obligor)
New Jersey 22-2423583
(State of Incorporation) (I.R.S. Employer
Identification No.)
10 Highway 35, PO Box 500 Redbank, NJ 07701
(Address of Principal Executive Offices) (Zip Code)
Debt Securities
(Title of Indenture Securities)
GENERAL
Item 1. General information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority
to which it is subject:
Comptroller of the Currency, Washington, D.C.
Board of Governors of the Federal Reserve System, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 3. Voting Securities of the Trustee.
Furnish the following information as to each class of voting
securities of the trustee:
Col. A Col. B
------ ------
Title of Class Amount Outstanding
Not applicable
Item 4. Trusteeship under Other Indentures:
If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:
(a) Title of the securities outstanding under each such other indenture.
Not Applicable
(b) A brief statement of the facts relied upon as a basis for the
claim that no conflicting interest within the meaning of Section 310(b)(1) of
the Act arises as a result
of the trusteeship under any such other indenture, including a statement as to
how the indenture securities will rank as compared with the securities issued
under such other indenture.
Not Applicable.
Item 5. Interlocking Directorates and Similar Relationships with the Obligor
or Underwriters.
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the obligor, identify
each such person having any such connection and state the nature of each such
connection.
Not Applicable
Item 6. Voting Securities of the Trustee Owned by the Obligor or its Officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner and
executive officer of the obligor.
- ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D.
- ------------------------------------------------------------------------------
Percentage of Voting
Amount owned securities represented
Name of Owner Title of Class beneficially by amount given in Col. C
Not Applicable
Item 7. Voting Securities of the Trustee Owned by Underwriters or
their Officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner, and executive officer of each such underwriter.
Col. A Col. B Col. C Col. D.
------ ------ ------ -------
Percentage of Voting
Amount owned securities represented
Name of Owner Title of Class beneficially by amount given in Col. C
Not Applicable
Item 8. Securities of the Obligor Owned or Held by the Trustee.
Furnish the following information as to securities of the obligor
owned beneficially or held as collateral security for the obligations in
default by the trustee.
- ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D.
- ------------------------------------------------------------------------------
Whether the Amount owned beneficially Percent of class
securities are or held as collateral represented by
voting or non obligations in default by amt given in Col C
Not Applicable voting Trustee
Item 9. Securities of the Underwriters Owned or Held by the Trustee.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor,
furnish the following information as to each class of securities of such
underwriter any of which are so owned or held by the trustee.
- ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D.
- ------------------------------------------------------------------------------
Name of Issuer Amount Amount owned beneficially Percent of class
and title of Outstanding or held as collateral represented by
less obligations in default by amt given in Col C
Trustee
- ------------------------------------------------------------------------------
Not applicable
Item 10. Ownership or Holdings by the Trustee of Voting Securities of
Certain Affiliates or Security Holders of the Obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10 percent or more of the voting securities of the
obligor or (2) is an affiliate, other than a subsidiary, of the obligor,
furnish the following information as to the voting securities of such person.
- ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D.
- ------------------------------------------------------------------------------
Name of Issuer Amount Amount owned beneficially Percent of class
and title of Outstanding or held as collateral represented by
less obligations in default by amt given in Col C
Trustee
- ------------------------------------------------------------------------------
Not Applicable
Item 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.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of the
trustee, owns 50 percent or more of the voting securities of the obligor,
furnish the following information as to each class of securities of such
person any of which are so owned or held by the Trustee.
- ------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D.
- ------------------------------------------------------------------------------
Name of Issuer Amount Amount owned beneficially Percent of class
and title of Outstanding or held as collateral represented by
less obligations in default by amt given in Col C
Trustee
- ------------------------------------------------------------------------------
Not Applicable
Item 12. Indebtedness of the Obligor to the Trustee.
Except as noted in the instructions, if the obligor is indebted to
the trustee,
furnish the following information:
Col. A. Col. B. Col. C.
- ------------------------------------------------------------------------------
Nature of indebtedness Amount outstanding Date due
- ------------------------------------------------------------------------------
Not Applicable
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.
None
(b) If the trustee is a trustee under another indenture under which
any other securities, or certificates of interest or participation in any
other securities, of the obligor are outstanding, or is trustee for more than
one outstanding series of securities under the indenture, state whether there
has been default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
None
Item 14. Affiliations with the Underwriters.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not Applicable
Item 15. Foreign Trustee.
Identify the order or rule pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be
qualified under the Act.
Not Applicable
Item 16. Lists of Exhibits.
1* -Copy of Articles of Association of the Trustee as now in effect.
2 -No certificate of authority of the Trustee to commence
business is furnished since this authority is contained in
the Articles of Association of the Trustee.
3** -Copy of the authorization of the Trustee to exercise corporate
trust powers.
4** -Copy of the existing By-Laws of the Trustee, as now in effect.
5 -Not applicable.
6 -The consent of the Trustee required by Section 321 (b) of
the Act.
7 -A copy of the latest report of Condition of the Trustee
published pursuant to the law or the requirements of its
supervising or examining authority.
8 -Not Applicable
9 -Not Applicable__________
*Exhibit thus designated has heretofore been filed with the Securities and
Exchange Commission, have not been amended since filing and are incorporated
herein by reference (see Exhibit T-1 Registration Number 333-47985).
**Exhibits thus designated have heretofore been filed with the Securities and
Exchange Commission, have not been amended since filing and are incorporated
herein by reference (see Exhibit T-1 Registration Number 333-49145).
In answering any item in this statement of eligibility and
qualification which relates to matters peculiarly within the knowledge of the
obligor or of its directors or officers, or an underwriter for the obligor,
the undersigned, First Union National Bank, has relied upon information
furnished to it by the obligor or such underwriter.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, First Union National Bank, a national banking association organized
and existing under the laws of the United States, has duly caused this
Statement of Eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Morristown, and State of New
Jersey, on the 17th day of August, 2001
First Union National Bank
(Trustee)
(CORPORATE SEAL)
By:___/s/ Stephanie Roche___
__________________________
Vice President
Exhibit T-6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321 (b) of the Trust
Indenture Act of 1939, and in connection with the proposed issue of K.
Hovnanian Enterprises, Inc. we hereby consent that reports of examinations by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
FIRST UNION NATIONAL BANK
By:_____/s/ Stephanie Roche_________
__________________________________
Vice President
Morristown, NJ
August 17, 2001
EXHIBIT T-7
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the First Union National
Bank, at the close of business on June 30, 2001, published in response to call
made by Comptroller of the Currency, under title 12, United States Code,
Section 161. Charter Number 22693 Comptroller of the Currency.
Statement of Resources and Liabilities
ASSETS
Thousand of Dollars
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin......... 9,537,000
Interest-bearing balances.................................. 1,509,000
Securities................................................... /////////
Hold-to-maturity securities................................ 0
Available-for-sale securities.............................. 45,221,000
Federal funds sold and securities purchased under agreements //////////
to resell 6,315,000
Loans and lease financing receivables:
Loan and leases held for sale 6,148,000
Loan and leases, net of unearned income......122,125,000
LESS: Allowance for loan and lease losses......1,740,000
LESS: Allocated transfer risk reserve.................0
Loans and leases, net of unearned income, allowance, and
reserve................................................. 120,385,000
Trading Assets .............................. 19,000,000
Premises and fixed assets (including capitalized leases)...... 2,742,000
Other real estate owned....................................... 100,000
Investment in unconsolidated subsidiaries and associated //////////
companies..................................................... 316,000
Customer's liability to this bank on acceptances outstanding... 856,000
Intangible assets.............................................
Goodwill.................................................. 2,329,000
Other intangible Assets.................................... 344,000
Other assets................................................. 12,662,000
Total assets............................................... 227,646,000
LIABILITIES
Deposits:
In domestic offices..................................... 131,429,000
Noninterest-bearing..................... .. 20,764,000
Interest-bearing.........................110,665,000
In foreign offices, Edge and Agreement subsidiaries,
and IBFs................................................ 11,657,000
Noninterest-bearing............................. 80,000
Interest-bearing.............................11,577,000
Federal funds purchased and securities sold under agreements
to repurchase 19,794,000
Trading liabilities........................................... 11,908,000
Other borrowed money:......................................... 22,811,000
Bank's liability on acceptances executed and outstanding..... 859,000
Subordinated notes and debentures............................ 5,993,000
Other liabilities............................................ 6,513,000
Total liabilities............................................ 210,964,000
Minority Interest in consolidated subsidiaries............... 964,000
EQUITY CAPITAL
Perpetual preferred stock and related surplus................. 161,000
Common Stock.................................................. 455,000
Surplus....................................................... 13,309,000
Retained Earnings........................ 1,877,000
Accumulated other comprehensive income............................. (84,000)
Other Equity Capital components........... 0
Total equity capital.......................................... 15,718,000
Total liabilities and equity capital.... 227,646,000
